Koo Yoon-cheol: "We sincerely apologize for not carefully overseeing leveraged ETFs... Virtual asset taxation will proceed as scheduled"

Deputy Prime Minister Koo Yoon-cheol stated regarding single-stock leveraged exchange-traded funds (ETFs), which have been identified as a cause for the recent sharp decline in the stock market, "We sincerely apologize for not thoroughly considering how these products would perform after their launch."

At the plenary session of the Budget Committee on the 29th, Deputy Prime Minister Koo said, "The government is contemplating ways to reduce volatility in the stock market itself and move steadily without being swayed by temporary fluctuations," adding this point.

The opposition party focused intensively on the issue of single-stock leveraged ETFs, arguing that these products, which track the price movements of individual stocks at approximately double their rate, have increased stock market volatility. The KOSPI index fell 10.84% on the 28th and dropped another 5.98% on this day.

The government announced supplementary measures on the 16th, including raising the basic deposit requirement for leveraged ETFs from 10 million won to 30 million won. Deputy Prime Minister Koo stated, "If necessary, we will prepare additional supplementary measures."

Questions regarding the tax reform plan to be released by the Ministry of Economy and Finance soon also continued. Deputy Prime Minister Koo said, "We aim to rationalize real estate taxation while ensuring that citizens do not perceive it as punitive, by preparing various forms of reasonable measures." He further emphasized again the existing stance that "real estate taxation will not be used to control housing prices."

Regarding virtual asset taxation, Deputy Prime Minister Koo said, "We are proceeding with taxation starting next year as scheduled. If necessary parts require adjustment, we will move forward in a direction of supplementation." Virtual asset taxation, originally planned for introduction in 2022, has been postponed three times to 2023, 2025, and 2027.

Meanwhile, Shin Hyun-song, Governor of the Bank of Korea, who attended the Budget Committee meeting on this day alongside others, said, "Maintaining the trend of raising the base rate is the most reasonable approach to curb core inflation," hinting at additional base rate hikes within the year. The Bank of Korea Monetary Policy Board decided on the 26th to raise the base rate by 0.25 percentage points to an annual rate of 2.75%. This base rate increase marks the first such move in three years and six months.