South Korea Unveils Road Map to Internationalize Korean Won

According to Yonhap, South Korea's finance ministry unveiled a road map on Sunday to improve access to the Korean won and advance its internationalization, with the goal of making it a freely convertible currency. The plan calls for completing offshore won transaction and settlement systems, removing institutional restrictions and easing foreign exchange rules and market practices as Seoul seeks to build on the recent launch of a 24-hour foreign exchange market.

The ministry said foreigners still face structural hurdles to using the won overseas, including the lack of offshore infrastructure, requirements to open accounts at domestic foreign exchange banks for some settlements and prior reporting obligations for certain capital transactions. South Korea also plans to revise the benchmark exchange rate methodology for accounting, taxation and transactions by replacing the current market average rate (MAR) with the time-weighted average price (TWAP), while introducing electronic foreign exchange guidelines in August to support automated overnight trading. It also plans to let foreigners settle transactions through won accounts at offshore settlement institutions without opening domestic bank accounts and to expand trade insurance coverage limits to encourage use of the won in international trade.