South Korea is introducing a system for overseas won-handling institutions, known as RFI-K, to allow the Korean won to be traded freely outside the country.
The Ministry of Economy and Finance said on the 16th that it had revised and published amendments to the guidelines on foreign exchange business by foreign financial institutions and to the Foreign Exchange Transactions Regulations. The move follows the won internationalization roadmap announced in July.
Under the amendments, foreign financial institutions registered with the government may open omnibus accounts at foreign exchange banks in Korea and process won remittances, investments and lending transactions for non-resident clients through the Bank of Korea's won international settlement network. Capital transactions denominated in won between non-residents will also be exempt from reporting requirements. Domestic real estate transactions are excluded.
If an institution temporarily runs short of won during settlement, it may borrow won for settlement purposes from domestic banks without any ceiling. The threshold for exemption from reporting on general won borrowing was also raised to 100 billion won from 30 billion won. RFI-K institutions must verify whether clients are non-residents and report major transaction records to the Bank of Korea each month.
