Deposit assurance limit to be increased

The government has decided to partially adjust its previously set 20 million won per person limit in relation to the deposit assurance scheme to be implemented in January, which applies to banks, merchant banks and other financial institutions. The limit is expected to be increased, but the implementation of the scheme will likely proceed as scheduled.

Minister of Finance Jin Nyum, who is attending the Annual IMF Meeting in Europe, held a press conference in London, where he revealed that the deposit assurance scheme, a main social interest, may be implemented more loosely than expected.

Minister Jin said, ¡°The goal for reforms is to strengthen competitiveness and if excessive emphasis is put on reform methodology then the reforms may in fact fail.¡±

He added that the implementation of the deposit assurance scheme may bring on further collapses of merchant banks and if this situation transpires, it may be difficult to adhere to the pledge of not raising a third round of public funds. As the side wanting to raise the limit and the opposing faction are both showing no signs of giving in, a comprehensive study will be made to produce a final decision upon Minister Jin's return to Seoul.

In relation to this matter, an official at the MOFE revealed that three options are being considered --implementing the present scheme, keeping the implementation period the same but raising the limit, or postponing the implementation of the scheme. At this time, the second option seems to be the most likely.

In more detailed plans regarding the deposit assurance scheme, open deposit accounts with low interest rates will have the limit raised to 30-50 million won while financial products with high interest rates will see the limit remain at 20 million won. In addition, the deposit assurance limit for non-bank institutions will be higher, as they will be more affected by the implementation of the scheme. There are also plans to raise the assurance limit to 30-50 million won for all deposits.