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[Alpha Biz=(Chicago) Reporter Kim Jisun] Yoo Jae-hoon, president of the Korea Deposit Insurance Corporation, said he will prepare for "Deposit Insurance 3.0" and start developing a "quick crisis response system" that can cope with rapid financial insolvency. The plan is to quickly cope with digital bank run by introducing a rapid reorganization system.
President Yoo said at a "year-end press conference" held at the President Hotel in Jung-gu, Seoul on the 8th that it is "deposit insurance 3.0 to find the role of the new forecast" ahead of the end of the special account for savings banks in 2026 and the end of the repayment fund in 2027.
"Instead of relying on public funds, we should think about how each financial sector will protect financial contractors from the risk of bankruptcy of the financial sector under its own responsibility," he said. "We must supplement deposit insurance 3.0 based on self-responsibility and mutual structure principle based on market principles."
Yoo suggested ways to upgrade the original function of the deposit insurance system △ to expand the scope of protection of financial products △ to strengthen the protection of financial contractors for deposit insurance 3.0. It also cited the implementation of global standards for ESG management, high-quality internal end system, and digital transformation as parts for the forecast to innovate.
In addition, the government plans to make a full-fledged plan next year to make timely arrangements for insolvent financial companies at a time when the financial market is rapidly changing. "The common thing between the Silicon Valley Bank of America (SVB) and the Credit Suisse (CS) crisis in the U.S. is that there is no time to verify and confirm the insolvency of financial firms," President Yoo said.
"I think we will be able to institutionalize it in earnest next year in consultation with the government and authorities," CEO Yoo said. "Starting with savings banks, the Korea Deposit Insurance Corporation has created a system that can deliver mobile phones to those responsible for changes in deposits through digital monitoring."
"There was a moment when we were a little complacent during the 2011 savings bank crisis," he said. "Considering what happened in the U.S. or Switzerland, we need to develop an additional cleanup system (rapid cleanup system)."
Regarding the deposit protection limit, he said, "The deposit protection limit is 50 million won, and expanding it to 100 million won is an option, but adding deposit protection for each product could also be an option," adding, "This year, we have added a separate target of protection as the latter method."
Regarding the sale of MG Insurance and the recovery of Seoul Guarantee Insurance's public funds, he said, "A number of uncertainties surrounding MG Insurance have been resolved since the third quarter," adding, "If there is proper support from the Korea Deposit Insurance Corporation, I think there is still a good chance of selling it."
"Seoul Guarantee Insurance is collecting public funds by receiving 200 billion won in dividends every year," he said. "In the end, sales of old shares are important, and we will find various ways to sell them, whether they are IPO or not."
AlphaBIZ 김지선(stockmk2020@alphabiz.co.kr)
