Quantitative Easing of Bank of Korea to Come to an End This Month

The Bank of Korea will finish quantitative easing this month.

The Bank of Korea announced on July 22 that its RP purchase would be finished at the end of this month. This is based on its conclusion that securities companies’ financing conditions have come back to normal as a result of market stabilization measures of the government and itself.

The central bank introduced the program in March this year and conducted the purchase 16 times until July 21. As a result, 18.69 trillion won was supplied.

The termination of the program is because short-term market rates such as the call market rate are now stable. Individual investors increased their stock investments to result in an increase in customer deposits and better financing conditions of securities companies. In addition, the margin payment demand decreased as global major stock markets rebounded.

The central bank also announced that the termination of the full-supply RP purchase is not permanent. “The program can be resumed once financing conditions deteriorate or the interest rate volatility increases,” it explained, adding, “In addition, non-regular RP purchase may be conducted for the purpose of market liquidity supply.”