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Korea has been slowly but surely opening its markets up for foreign investors over the past year in a government-led move to align its system with the global standard.
Although such changes might appear to be a small step from an onlooker's perspective, they still mark a giant leap for Korea, Financial Services Commission (FSC) Chairman Kim Byoung-hwan said Thursday.
“There have been a lot of changes made on the capital and foreign exchange markets,” said Kim during the 19th Korea Economic Forum in central Seoul on Thursday.
“From a foreign investor's perspective, such measures implemented by the Korean government may appear to be very minor ones, as the approach we take to market management is perhaps one of the most stringent,” the chief financial regulator noted.
“But from Koreans’ perspective, the recent market advancement measures are a giant leap forward,” Kim stressed, “because of our previous experience of the foreign exchange crisis during the 1997-98 period.”
As the lingering memory of the 1997 Asian financial crisis continues to haunt the Korean economy, authorities have long held a tight grip over its market to manage currency liquidity.
However, with its economy now boasting the world’s 12th-largest GDP, Korea’s limited market accessibility compared to those of major economies has become a liability. It is considered the key obstacle to Korea’s elevation to the developed market status by Morgan Stanley Capital International as well.
As such, financial regulators implemented a series of advancement measures last year, including extending the trading hours for the foreign exchange market to 2 a.m. and abolishing the Investment Registration Certificate rule, which has been mandatory for foreign investors for the past three decades.
“The progress Korea is making today represents a truly significant step forward, and we intend to keep marching in that direction,” Kim said.
![Ambassador of Czechia Ivan Jancarek asks a question after a lecture by Financial Services Commission Chairman Kim Byoung-hwan during the 2025 Korea Economic Forum at Lotte Hotel Seoul in Jung District, central Seoul, on March 20. [PARK SANG-MOON]](https://koreajoongangdaily.joins.com/data/photo/2025/03/20/73d7941b-524f-4d96-aad9-2f8269bbeacd.jpg)
“We hope investors, both home and abroad, join our reform initiative toward bigger market openness, even if the pace may come as somewhat unsatisfactory.”
During his keynote speech, the chairman cited the financial sector’s heavy exposure to the real estate market and household debt as two of the key challenges faced by the Korean economy.
Korea’s household debt-to-GDP ratio, in particular, ranked second among 38 economies worldwide at 91.7 percent, trailing only behind Canada’s 100.6 percent, according to the fourth quarter data from the Institute of International Finance.
“Korea’s household debt-to-GDP ratio had been rising for two decades and began to decrease in 2022 when the Yoon Suk Yeol administration launched,” said Kim.
Despite the recent moderation, the ratio still remains significantly high, the chairman said.
“Financial authorities are trying to find measures to stabilize [the debt situation], which is why the government is tightening its household debt management,” Kim stated.
![From left, Commercial Minister of the Embassy of Sri Lanka Chandima Abeyrathna, Deputy Head of Mission of Kenya Jacquiline Kenani and Counsellor of Cote d'Ivoire Koffi Philippe Malan listen to a lecture by Technology and Innovation Subcommittee under the Presidential Committee on AI Chair Cho Sung-bae during the 2025 Korea Economic Forum at Lotte Hotel Seoul in Jung District, central Seoul, on March 20. [PARK SANG-MOON]](https://koreajoongangdaily.joins.com/data/photo/2025/03/20/c3122342-4742-44e9-b79c-00cb54d98816.jpg)
The persistently high won-dollar exchange rate, on the other hand, will not lead to a liquidity crisis, he reassured, saying that today’s situation is vastly different from the previous cases of 1997 and 2008, when exchange rates surpassed the 1,400 won-per-dollar mark, leading to rapid foreign capital outflows.
The key difference from past crises lies in Korea’s status as a net creditor, with the country posting a record $1.1 trillion in its net international investment position at the end of last year.
“The indicators for Korea’s foreign exchange liquidity remain very stable,” said Kim.
“We are well aware of the fact that the current won-dollar exchange rate is weighing heavily on companies and will do our best to stabilize the situation,” the chairman added. “But the current situation will not pose a crisis.”
BY SHIN HA-NEE [shin.hanee@joongang.co.kr]
Fsc Chief Praises Korea's Progress Since 1997, Says Current Fx Situation 'not A Crisis'
Financial Services Commission Chairman Kim Byoung-hwan delivers a keynote address during the 2025 Korea Economic Forum at Lotte Hotel Seoul in Jung District, central Seoul, on March 20. [PARK SANG-MOON]
Korea has been slowly but surely opening its markets up for foreign investors over the past year in a government-led move to align its system with the global standard.
Although such changes might appear to be a small step from an onlooker's perspective, they still mark a giant leap for Korea, Financial Services Commission (FSC) Chairman Kim Byoung-hwan said Thursday.
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“There have been a lot of changes made on the capital and foreign exchange markets,” said Kim during the 19th Korea Economic Forum in central Seoul on Thursday.
“From a foreign investor's perspective, such measures implemented by the Korean government may appear to be very minor ones, as the approach we take to market management is perhaps one of the most stringent,” the chief financial regulator noted.
“But from Koreans’ perspective, the recent market advancement measures are a giant leap forward,” Kim stressed, “because of our previous experience of the foreign exchange crisis during the 1997-98 period.”
As the lingering memory of the 1997 Asian financial crisis continues to haunt the Korean economy, authorities have long held a tight grip over its market to manage currency liquidity.
However, with its economy now boasting the world’s 12th-largest GDP, Korea’s limited market accessibility compared to those of major economies has become a liability. It is considered the key obstacle to Korea’s elevation to the developed market status by Morgan Stanley Capital International as well.
As such, financial regulators implemented a series of advancement measures last year, including extending the trading hours for the foreign exchange market to 2 a.m. and abolishing the Investment Registration Certificate rule, which has been mandatory for foreign investors for the past three decades.
“The progress Korea is making today represents a truly significant step forward, and we intend to keep marching in that direction,” Kim said.
Ambassador of Czechia Ivan Jancarek asks a question after a lecture by Financial Services Commission Chairman Kim Byoung-hwan during the 2025 Korea Economic Forum at Lotte Hotel Seoul in Jung District, central Seoul, on March 20. [PARK SANG-MOON]
“We hope investors, both home and abroad, join our reform initiative toward bigger market openness, even if the pace may come as somewhat unsatisfactory.”
During his keynote speech, the chairman cited the financial sector’s heavy exposure to the real estate market and household debt as two of the key challenges faced by the Korean economy.
Korea’s household debt-to-GDP ratio, in particular, ranked second among 38 economies worldwide at 91.7 percent, trailing only behind Canada’s 100.6 percent, according to the fourth quarter data from the Institute of International Finance.
“Korea’s household debt-to-GDP ratio had been rising for two decades and began to decrease in 2022 when the Yoon Suk Yeol administration launched,” said Kim.
Despite the recent moderation, the ratio still remains significantly high, the chairman said.
“Financial authorities are trying to find measures to stabilize [the debt situation], which is why the government is tightening its household debt management,” Kim stated.
From left, Commercial Minister of the Embassy of Sri Lanka Chandima Abeyrathna, Deputy Head of Mission of Kenya Jacquiline Kenani and Counsellor of Cote d'Ivoire Koffi Philippe Malan listen to a lecture by Technology and Innovation Subcommittee under the Presidential Committee on AI Chair Cho Sung-bae during the 2025 Korea Economic Forum at Lotte Hotel Seoul in Jung District, central Seoul, on March 20. [PARK SANG-MOON]
The persistently high won-dollar exchange rate, on the other hand, will not lead to a liquidity crisis, he reassured, saying that today’s situation is vastly different from the previous cases of 1997 and 2008, when exchange rates surpassed the 1,400 won-per-dollar mark, leading to rapid foreign capital outflows.
The key difference from past crises lies in Korea’s status as a net creditor, with the country posting a record $1.1 trillion in its net international investment position at the end of last year.
“The indicators for Korea’s foreign exchange liquidity remain very stable,” said Kim.
“We are well aware of the fact that the current won-dollar exchange rate is weighing heavily on companies and will do our best to stabilize the situation,” the chairman added. “But the current situation will not pose a crisis.”
BY SHIN HA-NEE [shin.hanee@joongang.co.kr]
