South Korea is set to double the state-backed guarantee on bank deposits, raising the ceiling from KRW50mn to KRW100mn (around $71,900) from September 1, the Yonhap News Agency reports. The move, the first increase since 2001, aims to strengthen financial security as competition for deposits intensifies.
Under new rules approved by the National Assembly last year, deposits of up to KRW100mn will be safeguarded in the event of a bank failure. The guarantee will also extend to retirement pensions, pension savings, and insurance payouts, offering broader protection for savers.
Officials hope the revision will make banking more convenient by reducing the need for individuals to split their funds across multiple accounts to stay within the old limit. Yet concerns remain that higher guarantees could prompt a shift of funds towards secondary financial institutions, such as savings banks and insurers, which typically offer higher interest rates. So far, regulators report no signs of such movement.
The adjustment reflects ongoing efforts in South Korea to maintain confidence in the banking system amid rising economic pressures and a competitive financial landscape.
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