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South Korea rolled out measures aimed at redirecting bank funds from property lending to critical industries including semiconductors and artificial intelligence.
The so-called “productive finance” initiative lowers the regulatory burden on banks’ equity investments while tightening capital requirements for mortgage lending. The risk weight for banks’ equity investments will fall to 250% from 400%, while the floor for mortgage loan risk weights will rise to 20% from 15%. The new rules are set to take effect in the first quarter of next year.