On August 14, Second Vice Minister of Finance and Economy Huh Chang held a joint meeting of the Foreign Exchange (FX) Soundness Council and the Task Force (TF) for Korea’s Inclusion in the MSCI Developed Markets Index at the Korea Federation of Banks in Seoul.

The meeting brought together officials from the Ministry of Finance and Economy (MOFE), Financial Services Commission (FSC), Bank of Korea (BOK), Financial Supervisory Service (FSS), Korea Exchange (KRX), and Korea Securities Depository (KSD) to review progress in implementing the Roadmap for FX and Capital Market Reform for Korea’s Inclusion in the MSCI Developed Markets Index, announced in January, and discuss further implementation plans. To date, 30 of the 39 measures (77%) across the roadmap’s eight key areas have been completed. The relevant authorities agreed to implement three additional measures by the end of this year.

At the meeting, participants held in-depth discussions on follow-up measures to enhance transaction and settlement convenience for foreign investors. These included: (i) the distribution of e-FX^* guidelines to facilitate 24-hour FX trading; (ii) measures to improve the settlement facilitation funding scheme to ease KRW liquidity burdens associated with securities settlement; and (iii) plans for the BOK to establish a 24-hour settlement system that would enable foreign financial institutions to hold, transfer, and settle KRW overseas.

^* FX transactions conducted through electronic means, including the electronic provision of price information and the use of automated order-matching functions.

In addition, participants agreed to continue monitoring the smooth functioning of the reforms in the market and progress in addressing issues raised by investors through consultations with key global investors and other channels. They also agreed to share any newly identified challenges with relevant authorities through the MSCI Task Force and formulate and implement necessary follow-up measures.  

Participants then reviewed trading developments in the FX market, which has been operating 24 hours a day since July 6. Since the launch of 24-hour FX trading, market infrastructure has operated smoothly without any disruptions, including failed transactions, while the Korean won has remained relatively stable against the U.S. dollar compared with other major currencies. Participants also noted that trading volume has increased from levels recorded prior to the introduction of 24-hour trading.^* However, they assessed that late-night trading activity has been increasing only gradually, reflecting the early stage of 24-hour trading and time differences with overseas markets, among other factors. The relevant authorities therefore agreed to assign additional weight^** to late-night trading volume in the selection of leading banks^*** in the KRW/USD market, thereby strengthening incentives for domestic banks to trade during late-night hours.

^* Average daily spot trading volume in the interbank market: USD 17.39 billion (H1 2026) → USD 19.14 billion (since the extension of trading hours), up 10.1%.

^** Example weights: 1x (06:00-18:00), 2x (18:00-22:00), 3x (22:00-06:00 the following day).

^*** Introduced in 2022, the program selects domestic banks that have contributed to promoting KRW/USD trading on an annual basis and provides them with incentives, including reductions in the Macroprudential Stability Levy.

Lastly, participants discussed the impact of the sharp rise in domestic stock prices on Korea’s external soundness indicators. Second Vice Minister Huh noted that, with the KOSPI rising 68 percent from 5,052 at the end of the first quarter to 8,476 at the end of the second quarter, Korea’s net international investment position (NIIP) is expected to decline significantly in the second quarter. He emphasized, however, that this does not indicate any deterioration in Korea’s external soundness. Participants also agreed that the decline in the NIIP is not attributable to weaker economic fundamentals, such as a current account deficit or increased external borrowing, but is largely driven by an increase in the value of domestic equities held by foreign investors, reflecting stronger fundamentals, including improved corporate performance.

The relevant authorities will continue to closely monitor the composition of Korea’s external assets and liabilities, as well as indicators of its external payment capacity, while actively communicating with market participants to prevent unnecessary misunderstandings.

Please refer to the attached files.