SEOUL, December 4 (AJP) - The Bank of Korea (BOK) announced on Thursday that it would increase short-term liquidity in the market by purchasing non-regular repurchase agreements (RPs).
This move, aimed at stabilizing financial markets, comes after President Yoon Suk Yeol declared a state of martial law on Tuesday night.
Typically, the BOK supplies liquidity through regular RP purchases. However, to address the extraordinary circumstances, the central bank expanded the range of eligible collateral bonds and institutions. This ensures sufficient short-term funds to maintain smooth monetary flows in the economy.
The BOK's Monetary Policy Committee convened an emergency meeting on Wednesday morning to discuss the martial law declaration and subsequent lifting. In response, the central bank implemented a series of measures to provide large-scale liquidity support.
To enhance the supply of Korean won liquidity, the BOK added a variety of bonds to the list of eligible securities for RP transactions. These include industrial finance bonds, small and medium enterprise finance bonds, export-import finance bonds, special bonds issued by nine public institutions, agricultural finance bonds, fishery finance bonds, and financial bonds under the Banking Act.
Furthermore, the central bank expanded the range of institutions eligible for RP transactions to encompass all domestic banks, foreign bank branches, investment dealers, investment brokers, and the Korea Securities Finance Corporation.
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