S. Korea to join key global government bond index starting 2025

[Anchor]

The FTSE Russell's World Government Bond Index includes 25 major countries such as the United States and Japan, and is referred to as the gathering of developed country bonds.

This morning (10.9), it was reported that South Korea will be included as the 26th country in the index.

The scale of international funds that move according to this index is $2.5 trillion, which is approximately 3,300 trillion won in our currency, and it is expected that up to 80 trillion won will be invested in Korea next year.

The government's efforts in foreign exchange market structural reform and maintaining sound finances have been recognized, and reporter Kim Jin-hwa will report on what effects this inclusion may bring.

[Report]

The UK's FTSE Russell, which manages the World Government Bond Index, began to pay attention to South Korea two years ago since it placed it in the organization's watch list.

However, despite efforts, there were many in the industry who believed that inclusion this year would be difficult.

This was due to the accessibility of the bond market.

In response, the government opened a consolidated government bond account in June of this year and extended the foreign exchange trading hours to 2 a.m. the next day, in line with the expectations of global investors.

Since the market size and national credit rating had already met the criteria, as the level of market accessibility improved, FTSE Russell explained that this was a positive development for inclusion.

[Choi Sang-mok / Deputy Prime Minister and Minister of Economy and Finance: "This means that our government bond market has successfully received its fair value."]

It is expected to also provide relief in national financial management.

When the index is included in November next year, the funds expected to flow into the country are estimated to be between 60 to 80 trillion won.

This is comparable to the annual net issuance of government bonds.

With large-scale global funds entering, interest rates are expected to decrease, reducing the cost of financing for the government and businesses, and helping to stabilize the exchange rate.

[Hwang Se-woon / Research Fellow at the Korea Capital Market Institute: "This means that the cost incurred when the government borrows funds will decrease because interest rates are falling."]

Meanwhile, the prohibition of short selling in our stock market was pointed out as an issue in this evaluation.

This is KBS News, Kim Jin-hwa.