The South Korean government plans to unveil a roadmap this month for transitioning the won from a restricted currency to a freely convertible currency. This initiative marks a significant shift in foreign exchange policy, which has been maintained since the 1997 financial crisis, and includes measures to manage risks such as increased volatility in the foreign exchange market.
On July 8, the Ministry of Finance held a meeting of the 'Won Internationalization Task Force (TF)' at the Government Seoul Building, chaired by Deputy Minister Heo Chang. The meeting included representatives from the Ministry of Finance, the Financial Services Commission, the Bank of Korea, the Financial Supervisory Service, and the Korea Securities Depository.
Participants reviewed key elements of the 'Won Internationalization Roadmap' that has been prepared since the TF's launch in February and discussed additional measures for enhancement.
The government plans to finalize and announce the roadmap later this month after coordinating with relevant agencies. The roadmap is expected to include detailed tasks aimed at increasing the convertibility of the won and its utilization in current and capital transactions.
The primary goal of the roadmap is to transition the won from a 'restricted currency' to a 'freely convertible currency.' Currently, the won is classified as a currency with limitations on offshore transactions and settlements. The government aims to enhance access to the foreign exchange market and expand the trading base of the won to elevate the level of the domestic foreign exchange and financial markets.
However, the internationalization of the won is a measure that broadens the scope of foreign exchange market openness, making volatility management crucial. Participants discussed strategies to address potential risks, including increased volatility in the foreign exchange market during the process of internationalizing the won.
Deputy Minister Heo stated, 'The internationalization of the won is a fundamental reform of the foreign exchange policy maintained since the 1997 financial crisis,' and urged all agencies to take responsibility and do their best in the roadmap's preparation and execution.
Following the roadmap announcement, the government plans to quickly detail specific implementation plans for each task and will continuously monitor the progress of these tasks while communicating with the market through the Won Internationalization TF.
* This article has been translated by AI.
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