Postal savings accounts might change

The government has worked out a contingency plan to lower the interest rate of postal savings deposits, which are fully guaranteed.

The Ministry of Finance and Economy, the Financial Supervisory Commission and related agencies announced Monday that the change is needed to prevent disturbances in the capital market as a result of massive flow of money into postal savings. The change was prompted by the introduction of a partial deposit payment system to go into effect next year at other financial institutions.

Postal savings accounts originally were intended to provide banking services to the underprivileged rural population, but they are changing into a means of attracting large quantities of money from the better-off depositors. Eventual abolition of the savings accounts might be considered to curb the deterioration of the system into an irregular channel of saving money, according to the sources.

Continuous decrease of postal savings interest rate sought:

Yoon Yong-Ro, chief of the bank supervision section, said that more than 5 trillion won has been crowded into post offices as a result of uncertainty in the money market. He said to stave off the wave of funds going into postal savings, measures are required to lower the interest rate of postal savings continuously.

Financial Supervisory Commission demands abolition:

The Financial Supervisory Commission, in charge of overall policy for the capital market, is in favor of abolishing postal savings altogether. It is of the opinion that the preferential 100 percent guarantee of deposits offered by the government is undesirable. Commission officials argue that it is inappropriate for the Ministry of Information and Communication to engage in the banking business. At the same time, banking institutions in provincial areas complain that they can hardly survive because most of their customers are attracted to post offices.

Ministry of Information and Communication is defiant:

On the other hand, the Ministry of Information and Communication, which has 21 trillion won in postal savings, is opposed to the position of the Ministry of Finance and Economy and the Financial Supervisory Commission. The MIC¡¯s financial planning section chief Lee Jae-Tae contends that because postal savings are not liable to mismanagement of profits arising from their deposits, they will all rebound to the general account of the government and to the national treasury in the long run.