Treasury Service

  1. Financial Stability
  2. Payment Systems
  3. Treasury & Debt Securities
  4. Treasury Service

The BOK’s Role in Treasury Service

The Bank of Korea(hereinafter, 'BOK') handles treasury business as ‘banker to the government’. This is one of the main functions which the central bank carries out.

The BOK, as the depository of the treasury funds of the Republic of Korea, handles receipts and disbursements of Treasury funds for the central government and its agencies in accordance with the following legislation.

The Bank of Korea, as the depositary of the Government of the Republic of Korea, shall handle national revenue deposits in accordance with the provisions of the Treasury Funds Management Act." (Article 71 of the Bank of Korea Act)

"The Bank of Korea should handle the business of the receipt and disbursement of treasury funds." (Article 36 of the Treasury Funds Management Act)

Treasury Services of the BOK

Receipt of treasury funds

Although the BOK is the actual organization which receives and disburses treasury funds, there is only a limited number of BOK branches, and the BOK therefore designates branches of financial institutions nationwide as Treasury Agencies and commits the receipt business to them.

The BOK head office and BOK branches collect treasury funds received by Treasury Agencies within their jurisdiction, and carry out instructions to Treasury Agencies and their management. According to the Treasury Funds Management Act, the Postal Service Organization (post offices) also deal with treasury funds.

Disbursement of treasury funds

Before 2003, the Government's Disbursement Offices issued treasury checks for payment. However, after the launch of Treasury Funds Real Time Transfer System, Disbursement Offices pay treasury funds to creditors directly via this system.(See below 'Treasury business computerization/ Electronic payment system of treasury funds' for detail.)

Accounting system for treasury funds

Receipt and disbursement of treasury funds are accounted for using two separate methods, Treasury Funds Accounting and Treasury Business Accounting.

  • Treasury Funds Accounting

    When treasury funds handled by branches of the BOK and by Treasury Agencies are concentrated into the BOK head office, this is immediately reflected in an increase or decrease in the government account.

    All kinds of treasury funds (Revenues, Expenditures, Other Treasury Funds) are concentrated and accounted for as deposits of the state, in accordance with the Treasury Funds Management Act.

  • Treasury Business Accounting

    Because Treasury Funds Accounting by itself does not show what kind of government funds have been handled, there is a need for additional detailed accounting by sub-accounts to clarify the details of increases or decreases of the government account.

    This detailed Treasury Business Accounting starts with the sorting and listing of treasury funds transactions into sub-accounts, by receipt evidence and disbursement evidence. It ends with the compilation of the daily Treasury Funds Balance Sheet.

Treasury business electronization

  • Electronic receipt of treasury funds

    As of 2000, a few Revenue Collecting Offices had introduced a system for paying revenues by electronic means, for the taxpayers' convenience.

    For taxpayers paying their taxes by contacting the electronic payment web-sites of such Revenue Collecting Offices, or through other electronic means, their banks first withdraw the relevant amounts of money from their accounts. These banks file-transfer the data to the BOK on the following day. The BOK then settles the treasury funds in accordance with this data on the subsequent business day.

  • Electronic payment system of treasury funds

    As of 2003, the Ministry of Strategy and Finance (MOSF) and the BOK had introduced a system for paying treasury funds by electronic means, for the creditors' convenience.

    Disbursement Offices individually establish disbursement accounts at the BOK in advance, and pay treasury funds to creditors by the Treasury Funds Real Time Transfer System, introduced in 2003 and operated by means of file-transfer through the network (Treasury Network) connecting the MOSF(including the Disbursement offices), the BOK, and financial institutions.

    Disbursement Offices summarize the individual disbursement data and send this to the BOK, and the BOK then sends this to financial institutions through the Treasury Network. As soon as receiving the notification of payment from a financial institution to a creditor's account, the BOK notifies the result to the relevant Disbursement Office.