Foreign investors to use won overseas without accounts at Korean banks
Gov't announces won internationalization road map to expand foreign access, raise growth potential
A Hana Bank official checks 50,000 won banknotes at the bank's headquarters in Seoul, July 15, 2025. Newsis
Korea will establish an offshore won settlement system and ease foreign-exchange regulations under a road map to internationalize the Korean won, officials said Sunday, as Seoul seeks to make the currency more widely usable overseas.
The measures are designed to make it easier for foreign investors to buy, hold and use the won regardless of time or location, encouraging greater investment in won-denominated assets. Over the longer term, the government aims to boost potential growth by driving wider international use of the local currency.
The road map, jointly announced by the Ministry of Finance and Economy, the Bank of Korea (BOK), the Financial Services Commission and the Korea Securities Depository, seeks to turn the won from a restricted currency into a freely convertible currency, marking the biggest overhaul of the foreign-exchange regulatory framework established after the 1997 Asian financial crisis.
A key part of the plan is launching an offshore won settlement system that will allow foreign investors to hold and settle won through designated overseas financial institutions without opening bank accounts in Korea.
For example, an investor in New York will be able to obtain won and make transactions during U.S. business hours through a local financial institution registered with Korean authorities, without having to wait for Korean banks to open.
A Japanese tourist will also be able to retain leftover won in a bank account in Tokyo after returning home.
"Offshore won settlement institutions will be subject to registration rather than licensing," Lee Hyung-ryul, deputy director general for international finance at the ministry, said during a briefing.
A pilot program of the system will begin in September before its full launch in January. It will be operated by the BOK and work alongside Korea's virtually 24-hour foreign-exchange market introduced earlier this month.
The road map also eases restrictions on foreigners' won-denominated capital transactions by more than doubling the thresholds for transactions that require advance reporting under the Foreign Exchange Transactions Act. Transactions that are deemed to pose little risk to financial stability can instead be reported after they are completed.
In order to encourage the use of the won in cross-border trade, the government will offer incentives for transactions settled in the local currency. Incentive options under consideration include preferential interest rates on policy financing for won-denominated trade transactions.
Officials work in a dealing room at Hana Bank's headquarters in Seoul's Jung District, Thursday. Yonhap
Officials said these reforms would make it significantly easier for foreign nationals to invest in Korean assets.
"The goal is to create an environment where foreign investors can hold and use the won freely without hesitation," Lee said.
He described the road map as the biggest turning point in the country's foreign-exchange framework since the aftermath of the 1997 Asian financial crisis.
"While our foreign-exchange policy has long focused on preventing another currency crisis, internationalizing the won marks a shift toward capturing the economic benefits of wider global use of the won, including stronger potential growth," he said.
The reforms, however, could also make the won more volatile during periods of global financial stress.
Lee acknowledged the possibility that increased foreign holdings of the won could lead to higher market volatility linked to external shocks.
"Even so, we believe that the long-term benefits of internationalizing the won outweigh those risks, which is why we decided to move forward with these measures," he said.
To manage those risks, authorities said they would expand bilateral currency swap arrangements and step up monitoring on offshore markets.
The finance ministry and the central bank will jointly monitor overnight trading for sharp exchange-rate moves and gaps between onshore and offshore exchange rates, while maintaining close contact with offshore settlement institutions.