![\"The](\"https:\/\/www.europesays.com\/korea\/wp-content\/uploads\/2026\/07\/news-p.v1.20260719.48aee29f228d46bca08f7076bddc06d7_P1.jpg\"\/ "\\"Korea")
The real-time won-dollar exchange rate is displayed in the dealing room at Hana Bank’s headquarters in Jung-gu, Seoul, on the afternoon of the 14th. Yonhap News<\/p>\nThe real-time won-dollar exchange rate is displayed in the dealing room at Hana Bank’s headquarters in Jung-gu, Seoul, on the afternoon of the 14th. Yonhap News<\/p>\n
The government will introduce incentives to shift won transactions away from non-deliverable forwards (NDF), which have been cited as a factor amplifying exchange rate volatility, toward the deliverable forward (DF) market, where actual won changes hands. When foreign governments sign purchase contracts with Korean companies in areas such as defense and nuclear power in won, they will be offered low interest rates, and foreigners will be allowed to freely open and use won accounts at overseas financial institutions registered with the Korean government.<\/p>\n
The Ministry of Economy and Finance announced the “Won Internationalization Roadmap” on the 19th, jointly with related agencies including the Bank of Korea (BOK) and the Financial Services Commission (FSC). The core of the plan is to establish a 24-hour offshore won settlement system that allows foreigners to open won accounts at overseas financial institutions and freely conduct everything from deposits to loans, remittances and payments. The plan eases regulations on won capital transactions, expands trade and investment demand and nighttime liquidity supply, and also establishes an FX safeguard to reduce market volatility.<\/p>\n
First, foreign exchange authorities will prepare a plan by September to grant incentives for DF transactions by foreign exchange banks, in order to gradually steer won NDF trading toward DF trading. The NDF market is an offshore trading market where actual won is not exchanged, and only the difference between a pre-set exchange rate and the exchange rate at maturity is settled in dollars. Investors can hedge exchange rate risk by betting on the appreciation or depreciation of the won without directly holding it. Recently, however, speculators betting on won weakness have flocked to NDF, pushing up the NDF exchange rate, which in turn affects the spot market and has been cited as a channel that increases exchange rate volatility. To convert this “tail-wags-dog” NDF-centered won trading in the foreign exchange market into DF market trading where actual won changes hands, authorities will introduce measures to favor DF transactions when calculating forward positions and the macroprudential stability levy. Specific measures to activate DF transactions will be announced in September.<\/p>\n
Measures to expand won liquidity supply will also be pursued. The government will review a plan to provide export financing incentives when purchase contracts with foreign governments in areas such as defense and nuclear power are signed in won. A representative method would be for an importing country’s government to settle at least a certain portion of the export contract amount in won-denominated terms with Korean policy financing institutions such as the Export-Import Bank of Korea, and receive preferential interest rates. In addition, when the Export-Import Bank of Korea provides on-lending financing to local banks, it will encourage the granting of credit lines in won as well as the existing dollars. In this case, foreign local banks can raise funds from the Export-Import Bank of Korea on favorable terms and lend to local companies that have business relationships with Korean companies.<\/p>\n
In line with the expansion of 24-hour foreign exchange trading, a liquidity supply system has also been prepared to prepare for won shortages. If foreign financial institutions run short of won at night, they will be allowed to raise funds through temporary borrowing from domestic foreign exchange banks, and if necessary, the Bank of Korea and the Ministry of Economy and Finance will supply additional won. Since extending won trading to 24 hours while lacking the won to actually settle could lead to distrust in the system, the structure has private banks lend first, with the government and the BOK serving as lenders of last resort.<\/p>\n
Won transactions between foreigners through offshore won settlement institutions will also be allowed without restriction. Until now, foreigners who wanted to hold or settle won had to open accounts at domestic foreign exchange banks. However, in line with the goal of won internationalization, the government will allow foreigners to freely conduct won business at offshore won settlement institutions registered with the government starting next month.<\/p>\n
For example, locals will be able to open won accounts at a JPMorgan branch in New York, U.S., or a Mitsubishi UFJ Bank branch in Tokyo, Japan, to hold funds for Korean bond investments in won or use services such as loans and remittances. Foreign exchange authorities will exempt won transactions between foreigners using offshore won settlement institutions from prior reporting of capital transactions, except for domestic real estate transactions. Authorities will establish a 24-hour offshore won settlement network at the Bank of Korea so that won transactions exchanged between overseas financial institutions can be finalized, and after a pilot operation, will implement it officially starting next year.<\/p>\n
Payment infrastructure for digital assets will also be prepared. The government will establish the basis for issuing, distributing and trading won-denominated stablecoins, and will manage cross-border inflows and outflows by amending the Foreign Exchange Transactions Act.<\/p>\n
Safeguards will also be expanded to prevent shocks arising from overseas won transactions from affecting the domestic market. The government intends to respond in advance to risks that could arise if foreigners sell won all at once due to won internationalization, or if won becomes scarce overseas. Foreign exchange authorities will expand a “second foreign exchange reserve” so that public sector foreign currency assets can serve as a means of supplying foreign currency liquidity in emergencies, and will expand bilateral and multilateral currency swaps between countries, similar to the ASEAN+3 regional multilateral currency swap. They will also establish new monitoring indicators to constantly check the liquidity situation in the offshore won market, and build a stable market management system to prevent liquidity problems in the offshore foreign exchange market from spreading to the domestic market.<\/p>\n
Lee Hyung-ryul, director general of the international finance bureau at the Ministry of Economy and Finance, said, “Since the enactment of the Foreign Exchange Transactions Act in 1999, foreign exchange policy has focused on managing won transactions on a limited basis to prevent a recurrence of the foreign exchange crisis.” He added, “This roadmap is a policy shift toward actively utilizing the potential benefits that our economy can gain by internationalizing the won.”<\/p>\n","protected":false},"excerpt":{"rendered":"The real-time won-dollar exchange rate is displayed in the dealing room at Hana Bank’s headquarters in Jung-gu, Seoul,…\n","protected":false},"author":2,"featured_media":90863,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[845,47812,8721,8797,26858,40977,112,28569,47813],"class_list":["post-90862","post","type-post","status-publish","format-standard","has-post-thumbnail","category-seoul","tag-bank-of-korea","tag-deliverable-forward","tag-foreign-exchange","tag-ministry-of-economy-and-finance","tag-ndf","tag-offshore-won-settlement","tag-seoul","tag-won-internationalization","tag-won-denominated-stablecoin"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/posts\/90862","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/comments?post=90862"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/posts\/90862\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/media\/90863"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/media?parent=90862"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/categories?post=90862"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/tags?post=90862"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}