BOK to use MBS for open market operation

South Korea’s central bank said Thursday that it will include mortgage-backed securities issued by the state-run housing financing agency in the scope of its open market operations from June.

The Bank of Korea said earlier in the day the monetary policy committee approved a motion to use MBS issued by the Korea Housing Finance Corp. as collateral for its repurchasing agreement operations in a bid to help tackle household debt problems.

The decision will help increase investors’ demand for such debts, which would ease households’ debt-servicing burden as borrowing costs will decrease, the BOK said.

The BOK usually buys financial institutions’ bond holdings or sells its own bond holdings to them via repurchase agreements, which require the institutions to repurchase or resell them at a later date. (Yonhap)