Deposit Protection Limit Rises to 100 Million Won

Starting next month, your deposits will be protected up to 100 million won – a significant increase from the previous 50 million won limit.This change opens up new possibilities for how and where you choose to save your money, particularly with savings banks and other financial institutions.

For 24 years, the deposit protection limit hadn’t changed. The last increase, in 2001, raised it from 20 million to 50 million won. Now, this substantial update will impact both depositors and financial institutions.

Why the Change Matters

The government anticipates that this higher limit will encourage more people to consider savings banks,which generally offer higher interest rates than traditional commercial banks. savings banks rely heavily on deposits – roughly 85% of their assets come from them. Because around 90% of existing savings bank deposits already fall within the previous protection limit, this change is expected to quickly boost confidence and attract new funds.

The Financial Services Commission and the Deposit Insurance Corporation estimate that savings bank deposits could increase by 16-25% as a result of this change. That translates to a potential influx of up to 25 trillion won, based on the current 100 trillion won in savings bank deposits.

What to Expect

While this is good news for savers, it could also widen the gap between larger and smaller savings banks. Larger savings banks are better positioned to attract these new funds. This could lead to increased competition and possibly, consolidation within the savings bank sector.

Ultimately, the increased deposit protection limit provides greater security and versatility for your savings. It’s a positive step towards a more stable and competitive financial landscape.