À̹ÌÁö È®´ë South Korean institutions have teamed up to create a 10 trillion won fund ($7.9 billion) devoted to stabilize the bond market and also vowed to cooperate with authorities when a similar funding is necessary for the stock market.
Chief of Financial Services Commission, Financial Supervisory Service, eight commercial banks convened a meeting on Friday and decided to deploy a bond market stabilization fund worth 10 trillion won. They plan to expand the size of the fund when necessary.
The lenders also agreed to join a stock stabilization fund upon the government¡¯s call.
A 10 trillion won bond market stabilization fund last was created in 2008 amid the Wall Street meltdown.
Bank then had chipped in 8 trillion won and non-banking finance firms including brokerages and insurers the rest.
The selloff in the Korean debt market was stopped by the string of positive news. The announcement of a new fund followed the Bank of Korea¡¯s announcement of buying 1.5 trillion won in government bonds on Friday and a $60 billion currency swap between the Korean and U.S. central banks which also can alleviate liquidity shortage for Korean companies. The three-year government bond yield fell 8.6 basis points to 1.107 percent and 10-year bond 4.6 basis points to 1.611 percent.
Banks pledged supports on the Korean government¡¯s relief program for small merchants announced on Thursday, which includes allowing small business owners to make emergency loans at a low interest rate of 1.5 percent at any financial institutions across the nation. In line with this, commercial lenders and credit guarantee companies have signed a collaboration agreement.
By Cho Jeehyun
[¨Ï Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]