South Korea Considers Requiring Banks to Hold More Capital as a Buffer
- Introduced in 2016, countercyclical buffer now set at 0%
- Officials cite risk of rising rates, currency and bad debts
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South Korea is mulling whether to require banks to hold more capital, as officials seek safeguard the financial system in the face an increase in interest rates and delinquencies.
The country is “actively considering” increasing its countercyclical capital buffer this year as well as introducing a system imposing additional capital on banks based on the results of stress tests, the Financial Services Commission said in a statement Thursday. The regulator cited increased uncertainties due to sharp rise in interest rates and the exchange rate. Household debt delinquencies were rising, it said.