[Economic Term] variable deposit requirement

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Today's economic term is variable deposit requirement.

Cross-border capital flows have the positive side of stimulating investment by lowering companies' financing costs, but if they occur on a large scale in a short period of time, they can cause rapid fluctuations in exchange rates or securities prices, harming economic stability. One of the systems to alleviate these side effects is the variable deposit obligation system.

This system is a means of controlling the size and speed of cross-border capital inflows and outflows by imposing a deposit obligation of a certain percentage on funds flowing from foreign countries.

However, these measures can only be taken within a period of 6 months unless there are special reasons, and if the reason for the measure has expired, it must be lifted immediately and does not apply to foreign direct investment.

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