A Study On Interest Rate Marketization Risk Control In South Korea

In the1970s, a wave of financial liberalization throughout the world, theinterest rate market is the core task of the financial liberalization reform. In order topromote the optimal resources allocation. improve operational efficiency of financialinstitutions, South Korea began the interest rate market-oriented reforms in1980.The process of Korea interest rate market is very twisty. Experienced twice toachiever the interest rate market.the first time failure of radical reform.and secondtime,Learned from the failure, finally the interest rate market.The process of interest rates market is a process of risk re-dispersion andaggregation, the interest rate risk is inevitably. During The interest ratemarket,Commercial banks face operational risk because the interest rate volatility.due to information asymmetry, adverse selection and moral hazard happened, whilebanks bring more Speculation for profit.and threat the economic stability seriously.South Korea learned from the failure during the second interest rate market,Takingeffective preventive measures before the interest rate market and when the interestrate market implement. So the interest rate market got good results.Before theinterest rate market,Consider seriously about the way and time of interest rate market.Reduce the impact of fluctuations on the economy. In the process of interest ratesmarket,Cooperated with the government, Taking the abundant financialtools,Adjust monetary policy,Strengthen financial regulation,Support weakestpeople,and prevent the risk to commercial banks effectively. Meanwhile Continuingto improve the market exit mechanism,establishing deposit insurance system.Dealwith bad assets,Prevent the risk of financial institutions bankruptcy during theinterest rate market. A series of risk control measures taken to promote thedevelopment of South Korea South Korea’s national economy, improve the profitability of commercial banks, and promote the development of SMEs, andachieved positive results. But due to the financial system behind the interest ratemarket, the weak of regulatory consciousness, so many large companies in Koreacontrolled foreigner.In July2013, China lending rates has been fully liberalized. Remaining a keystep-open deposit ceiling, Deposit interest rate is the most important and risky step.China and South Korea are of high national savings rate, and are the main banksystem’s financial system. The control of risk during south Korea interest rate marketwill be an important reference for china deposit interest rate market China shouldcreate a good condition for interest rate market,strengthen commercial banks’ riskawareness, continue to strengthen risk management, at the same time strengtheningmacro-prudential supervision of financial institutions to guard against financial risksto make adequate preparations for the interest rate market.