The central bank’s incentive is to encourage banks in lending to SMEs. Of the total amount of increase, one trillion won was set as a “Special Support Ceiling” that can be used to support firms selected by banks. In March 2009, the Aggregate Credit Ceiling was increased to 10.0 trillion won by raising the 'Special Support Ceiling ' to two trillion won. In December 2008, the Bank of Korea paid banks one-off interest of 500.2 billion won on their required reserve deposit to help them expand their credit supply capacity by raising their BIS capital adequacy ratios. The advantage of paying off banks interest rather than lower bank’s reserve requirement is that it can improve the banks’ balance sheet immediately. The government and the Bank of Korea decided to set up a “Bank Recapitalization” to help banks build up their capital by purchasing their bonds and stocks. The Fund is to consist of a maximum amount of 20 trillion won. The Bank of Korea has resolved to provide funds of up to 10 trillion won to the Korea Development Bank in the form of a loan with a maturity of up to one year. The Korea Development Bank will then provide these funds together with 2 trillion won of its own funds to support the “Bank Recapitalization …show more content…
Furthermore, during the year, domestic economic activity steadily increased due to the increase in exports and domestic demand. These increases happened because of the increases in private consumption and facility investments. In addition, GDP growth rose dramatically during 2010. Starting from around 0.2% quarter-on-quarter and ended up around 1.4% quarter-on-quarter. Also, employment conditions showed a big improvement and the number of employed individuals surpassed its level prior to the financial crisis. The number of employed increased from 130,000 to