The Bank of Korea said on November 3 that it designated 12 banks as market makers as part of a policy measure to encourage transactions between the yuan and won currencies without the mediation of the U.S. dollar. (image: Kobiz Media / Korea Bizwire)
SEOUL, Nov. 4 (Korea Biwire) — A total of 12 domestic and international banks including Shinhan Bank and Bank of Communications have been selected as “market makers” for won-yuan direct transactions. The Bank of Korea said on November 3 that it designated 12 banks as market makers as part of a policy measure to encourage transactions between the yuan and won currencies without the mediation of the U.S. dollar.
Of the 12 banks, domestic ones include Shinhan Bank, Woori Bank, Industrial Bank of Korea, Korea Development Bank, Standard Chartered Korea, Citibank Korea, and Korea Exchange Bank. Five foreign banks are Bank of Communications, Deutsche Bank, JP Morgan Chase, Industrial and Commercial Bank of China, and HSBC.
The 12 market maker banks were selected based on the criteria of financial soundness, won-dollar transaction records, and yuan currency accessibility. The banks will from now on constantly lead price formation by suggesting bid and offer price while supplying liquidity to the market.
A Bank of Korea official said, “The market maker scheme is intended to complement the initial supply and demand that may be lacking before the market takes off. We expect the scheme to help invigorate the won-yuan direct transaction market.” The banks selected as the market makers will be given a variety of incentives including exemption of contribution to improve the foreign currency market soundness.
By Sean Chung (schung10@koreabizwire.com)
