Korea’s Democratic Party to propose a bill to raise deposit insurance limit

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South Korea’s main opposition Democratic Party is expected to propose a bill to raise the limit on individual deposit insurance for the first time in 22 years on mounting concerns that the bankruptcy of Silicon Valley Bank in the U.S. could adversely affect the financial market.

According to an opposition party committee that focuses on measures to deal with economic crises on Monday, it is planning to raise the cap on individual deposits protected by the government to more than 100 million won ($76,775) by revising the deposit insurance act after approval by the parliament’s Deposit Insurance Committee. Currently, the cap is 50 million won.

The opposition party will also revise the law so that all deposits can be assured upon an approval from the cabinet should there be a dire need for protection such as a severe crisis in the financial market.

A severe crisis could be incidents like the recent collapse of the SVB, the Asian financial crisis in 1997 and the global financial crisis in 2008, according to the office of Kim Han-kyu, a Democratic Party lawmaker that is in charge of the bill proposal.

The Korean government, in fact, had temporarily protected all deposits from November 1997 to December 2000 in the wake of the Asian financial crisis.

Democratic Party Leader Lee Jae-myung is expected to announce a revised bill on Wednesday during the party’s meeting of Supreme Council members.

Many lawmakers of the ruling People Power Party are also known to be supporting the revision.

“There is a need to raise the deposit insurance limit that was on hold for a long time given that the Korean economy has grown in size and the protection limit is low compared with other countries,” said Hong Suk-joon, a ruling party lawmaker, who motioned a similar bill in March last year.