Korea Capital Market Institute

Program

Since the global financial crisis, a structural reform has been under way in Korea’s money market, especially the call market. The money market has a crucial role as a starting point of monetary policy to help the financial system and the overall economy to function effectively. Also, it provides liquidity management tools to financial institutions. Thus, herding and distortions in this market needs to be addressed from the wider perspective of systemic risk. 

Thus far, Korea’s structural reform in the money market has achieved a substantial part of the policy objectives initially intended. With the excessive reliance on the call market decreasing significantly, the interbank repo market has grown in terms of both quantity and quality. Nevertheless, the current policy stance that bans non-bank players from participating in the call market should be revisited in the view of money market efficiency and prevention of another financial system risk. 

Korea Capital Market Institute will host a policy debate titled “Money Market Reform: Evaluation and Policy Challenges” which will examine the impacts of Korea’s money market reform on the market as well as financial institutions, and then explores overseas money market structures and policy moves to present implications for Korea.