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2025-09-19 11:46:39
South Korea Relaxes Bank Ownership Restrictions to Stimulate High-Tech Industry Investment: South Korea has introduced a series of measures aimed at redirecting bank funds from real estate lending to key industries such as semiconductors and artificial intelligence. This so-called "productive finance" initiative reduces the regulatory burden on banks' equity investments while tightening capital requirements for mortgages. The risk weight for banks' equity investments will be reduced from 400% to 250%, while the minimum risk weight for mortgages will be raised from 15% to 20%. The new regulations are expected to take effect in the first quarter of next year. Furthermore, the South Korean government plans to incentivize insurance companies to invest in long-term assets by adjusting the Korea Insurance Capital Standards. Detailed revisions will be announced in October. South Korean policymakers have long argued that excessive capital flowing into the real estate market is crowding out financial resources that could support more vibrant sectors of the economy. They warn that excessive wealth concentration in real estate comes at the expense of key sectors such as technology, manufacturing, and small business investment, making the overall economy fragile and hindering innovation. By redirecting lending from speculative real estate to more productive sectors, officials are attempting to achieve a better balance and stimulate sustainable growth.
