Moreover, as banks tend to consider risk-free interest rates with short to medium-term maturities as the reference rates for pricing loans to non-financial corporations, the pronounced effects of the negative interest rate policy also propagate through the bank lending channel: our negative rate policy has contributed to a significant decline in lending rates to non-financial corporations since 2014, which in turn has translated into higher loan volumes channelled to the real economy.
Standards for financial soundness including those relating to capital, leveraging and liquidity are being tightened with a major focus on systemically important financial institutions. Korea proposed placing the construction of a global financial safety net on the official agenda at the last G20 global summit meeting.