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Gov’t Mulls Easing Rules on Overseas Remittance

Posted July. 25, 2008 08:53,   


The Financial Services Commission briefed the Presidential Council on National Competitiveness on its measures to modernize regulations in the financial sector yesterday. The measures include easing regulations on personal foreign exchange transactions so as to minimize damage on financial consumers and reducing regulations so that financial institutions can provide more products.

The government will consider measures to allow Koreans to remit foreign currencies worth more than $50,000 per year without documentary evidence. Also, it will scrap all regulations on small-scale foreign exchange transactions.

Also, the government will set up principles to be followed by financial institutions selling products such as insurance and fund. Financial institutions and their employees will face heavier responsibilities when they fail to provide full explanation on the risks of financial products.

Regarding securities transactions, the government will revise relevant regulations and help corporations to pursue M&A more proactively. For example, only shareholders who buy shares before the board of directors decides to pursue M&A will be allowed to exercise their appraisal right from next February. Currently, shareholders who express their stance against upcoming takeovers can buy more shares after the decision of the board of directors, thus gaining profits.

The government will drastically cut regulations that prevent financial institutions from creating new products.

In an effort to lower banks’ financing cost, the government will help banks to issue “structured covered bonds,” a sort of bonds collateralized against sturdy assets such as mortgage-backed bond.

Korea has permitted financial institutions to sell only financial vehicles based on the stock index. However, exchange traded funds, which are based on prices of commodities such as agricultural products and raw materials, will also be introduced. The government will make up for relevant regulations so that high-yield bonds rated lower than BB+ by credit rating agencies will be issued and circulated before the end of this year.

Upper 10 percent of listed firms will be designated as “well-known corporations” and cleared from the responsibility of public announcement in case of a capital increase.