meta_id 3015843

On March 30, 2026, the Financial Supervisory Service (FSS) announced a comprehensive benchmark interest rate reform initiative designed to strengthen financial market reliability and enhance consumer protection. The reform accelerates the transition from legacy rates to Korea's risk-free benchmark rate, the Korean Overnight Financing Rate (KOFR). The FSS is implementing four key measures. First, it is expanding KOFR adoption across multiple financial markets by increasing the target ratio of KOFR-based interest rate swap transactions from 50 percent to 70 percent by June 2030, and introducing a 50 percent target for KOFR-based floating rate note issuance by June 2031. The Korea Development Bank and Industrial Bank of Korea will launch KOFR-based lending products worth one trillion won in the second half of 2026. Second, the FSS will remove the Certificate of Deposit (CD) rate from the list of important financial transaction indicators by the end of 2030, encouraging market participants to shift to KOFR. Third, the FSS will phase out the Korean Interbank Offered Rate (KORIBOR) by suspending new KORIBOR-denominated loans from April 2027, mirroring the global discontinuation of LIBOR. Fourth, the FSS will strengthen the calculation methodology for the Composite Financing Cost Index (COFIX), which remains a key lending market benchmark, by proactively enhancing its compilation framework. These measures reflect South Korea's commitment to international financial standards and align with global benchmark rate reform initiatives. The FSS will oversee implementation through its Capital Markets Supervision Division, Banking Risk Supervision Division, and Banking Inspection Division.