Liberalization of Interest Rates on Demand Deposit

Park Seung, governor of the Bank of Korea said, “We will review plans which abolish a regulation of interest rates on a demand deposit in an advanced aspect of a financial market.”

He added, “As the financial market has been stabilized and a deposit base of the bank has been expanded, there will no be side effects in spite of the liberalization of interest rates on demand deposits.” Accordingly, there will be the abolition of the interests regulation of an ordinary deposit with the maximum rate of 1% per annum, a household current deposit,· special deposits and·a business free deposit (less than 7 days). The government took 1~3 steps measures of the liberalization of interest rates up to November 1995 according to the 4 steps plan of the liberalization of interest rates published in August 1991. Then, the government liberalized the interest rates on a time & saving deposit of frequent credit & debit in July 1997.

He announced, “We will adjust a supporting system of total amounts-limited loan effectively for the changed financial environment of small & medium companies.”

Kwu-Jin Lim mhjh22@donga.com