KDIC chief says financial stability account, rapid resolution regime can no longer wait

Korea Deposit Insurance Corporation President Kim Seong-sik said the agency must strengthen its financial stability functions and advance into a world-class financial stability institution.

Speaking at the KDIC's 30th anniversary ceremony Monday under the slogan "Financial stability built on trust, protecting the everyday lives of the people," Kim said the agency is at an "unprecedented turning point" requiring a fundamental redesign of the deposit insurance system, as the special account for savings banks and the KDIC bond repayment fund are both approaching their expiration dates in succession.

Then Kim said the financial stability account — which blocks the spread of a crisis before it occurs by providing effective funding support — and the rapid resolution regime, which enables administrative measures such as contract transfers to be carried out swiftly in situations such as bank runs, "can no longer be delayed." He also called for recalibrating the deposit insurance premium structure, including recalculating the appropriate target fund size and premium rates, and pursuing system improvements tailored to each financial sector and the characteristics of individual contract holders. He further emphasized strengthening protections for actual depositors, expanding government support for inspections of saemaul financial cooperatives, and improving the financial soundness of mutual finance sectors.

"If we have focused solely on resolving immediate financial stability issues, from now on we must think more broadly about how to become a KDIC that delivers greater benefits to the public," he added.

The financial stability account is a mechanism that provides debt guarantees and capital support to financially sound institutions facing temporary difficulties, cutting off the spread of a crisis before it takes hold.

Currently, KDIC funds can only be deployed to financial institutions where insolvency has already materialized. The core of the proposal is to extend that eligibility to institutions still operating normally. The rapid resolution regime would allow a troubled financial institution to be quickly sold or transferred without the consent of stakeholders.

Meanwhile, the KDIC unveiled a new vision at the ceremony: "A KDIC that protects the financial lives of the people and adds stability to finance."

The agency also published "New Deposit Insurance Theory," a volume covering research on the deposit insurance system and financial stability, along with "30 Years of the Korea Deposit Insurance Corporation," a record of the agency's achievements over the past three decades.

The KDIC is responsible for protecting depositors and maintaining the stability of the financial system. It guarantees deposit payouts when a financial institution is unable to meet its obligations due to bankruptcy or other causes. The corporation was established June 1, 1996, under the Depositor Protection Act.