Reason for proposal and main contents

The current law allows the Deposit Insurance Corporation to demand a failed financial institution or a financial institution feared to have failed to claim compensation for damages against the entities or persons who are believed to be responsible for the failure or suspected failure thereof.

However, the scope of its request for the provision of information is limited to the Court Administration Office, and the relevant central and local government agencies, making virtual assets a viable alternative means of hiding assets.

In response, the proposed amendment adds 'virtual asset operators' to the list of organizations which the Deposit Insurance Corporation may request to provide information so that it can trace the hidden assets of insolvent debtors. In so doing, it is designed to improve the debt recovery rate and thereby ensure fairness (Article 21-3 of the draft).

In addition, the current law provides a limit on deposit insurance money by the Presidential Decree in consideration the gross domestic product, in order to stabilize the financial market and protect depositors, while the Enforcement Decree of the Act sets a limit on insurance premiums of KRW 50 million.

It has been suggested that the limit on insurance money needs to be raised in view of the fact that it has remained the same since 2001, when it was set at KRW 50 million, although the gross domestic product per capita has increased by about 2.5 times, and the amount of insured deposits by about 3 times, over the past 20 years.

In response, the proposed amendment provides that the insurance money limit should be set by the Deposit Insurance Committee in the range of KRW 100 million or more. In the event of an urgent need to protect depositors, such as those undergoing a major financial or economic crisis, the insurance money limit would be set at the full amount of the deposits based on a resolution at a meeting of the Cabinet (Article 32 (2) of the draft).