Like the US... Government to Build Dedicated Payment Network for Offshore Won Settlement

Foreign Exchange Soundness Council and MSCI Developed Markets Index Inclusion Task Force
Introduction of Offshore Won Settlement Institution System

The government will establish a dedicated payment network next year to support 24-hour "real-time gross settlement" for offshore won settlement institutions. The goal is to enable payments and settlements to occur even during nighttime hours, thereby reducing credit risk caused by time lags between transactions and settlements.

On October 28, the Ministry of Economy and Finance held a meeting at the Government Complex Seoul, chaired by First Vice Minister Lee Hyungil, titled the "Foreign Exchange Soundness Council and MSCI Developed Markets Index Inclusion Task Force," where these measures were discussed.

During the meeting, which was attended by the Financial Services Commission, the Bank of Korea, the Financial Supervisory Service, the Korea Exchange, and the Korea Securities Depository, participants reviewed the progress of tasks announced since the launch of the MSCI Task Force in July and discussed future plans.

The agenda also included expanding the domestic foreign exchange market's operating hours to 24 hours. To this end, the participating institutions agreed to comprehensively review the systems, accounting processes, personnel, and costs required for 24-hour operation, and to finalize the implementation timeline and detailed plans by the end of this year.

In particular, supplementary measures will be pursued to link overseas branches and foreign exchange electronic trading (eFX) infrastructure so that domestic banks can secure favorable trading conditions even during nighttime hours.

A system tentatively named the "offshore won settlement institution" will also be introduced. This will allow licensed foreign financial institutions to freely trade, hold, and procure won through won accounts opened domestically, and, based on this, to legally conduct won payments and settlements between non-residents.

The participating institutions plan to establish the institutional framework by reviewing the scope and eligibility for this system and revising relevant regulations.

Vice Minister Lee stated, "By implementing these foreign exchange market improvement measures, we can significantly enhance overseas investors' access to the won," and urged the relevant institutions to cooperate closely to ensure the process proceeds swiftly and systematically.