Yoo Jae-hoon, Head of Forecasting, Announces Promotion of Swift Resolution System for Digital Bank Run Response

Yu Jae-hoon, President of the Korea Deposit Insurance Corporation, stated on the 8th that in response to growing concerns about digital bank runs following recent incidents such as the Silicon Valley Bank (SVB) crisis in the United States, he plans to promote the introduction of a 'Quick Resolution System (Special Resolution System)'.

[Image source=Yonhap News]

At a year-end meeting held at the President Hotel in Jung-gu, Seoul, President Yu said, "SVB and CS have shown that traditional bank runs can happen overnight under digital finance," expressing his views.

The Quick Resolution System refers to a system that allows financial authorities to sell or transfer insolvent financial companies without seeking consent from stakeholders such as bank shareholders.

President Yu said, "In Korea, the only system to quickly resolve a financial company in distress and stabilize the market is the financial company resolution system created over 30 years ago during the foreign exchange crisis," adding, "Just as the U.S. government made swift decisions during the SVB incident, we will study what kind of system can be established under our laws and regulations."

Regarding the lack of progress in the Financial Stability Account bill at the subcommittee stage, President Yu said, "We have not given up hope and expect good discussions at the last remaining subcommittee," but emphasized, "There is a Plan B that performs tasks comparable to the Financial Stability Account using existing resources and means, but having a new system would make the work easier and faster."

Concerning the twice-failed sale of MG Non-Life Insurance, he stated, "We still believe there is a possibility and will approach the sale with sincerity," and regarding the recent withdrawal of SGI Seoul Guarantee Insurance's IPO, he said that whether through IPO or sale, efforts to recover public funds will continue through various methods.

This content was produced with the assistance of AI translation services.