Recently, foreign media reported that South Korea's financial services regulator had asked major commercial Bank reserves to prepare about $4 billion in financing to support MGCCC, which was hit by customer withdrawals.

An official from the South Korean Financial Services Commission stated that the amount or other details cannot be confirmed, but has requested banks to cooperate through repurchase agreement facilities to provide liquidity support to MGCCC.

The official stated that "the liquidity of MGCCC is being closely monitored". Due to the sensitivity of the matter, the official declined to be named, and the committee did not provide further comments.

Korean Credit Cooperatives, called MG Community Credit Cooperatives in English, or MGCCC for short, is a special non bank financial intermediary, a special Shadow banking system, not a bank, but a bank business.

The organization began as a credit mutual aid group for the New Village Movement in Korea in 1963 and has been closely integrated with grassroots communities in Korea since then.

Its total assets (284 trillion Korean won, approximately 220 billion US dollars) are approximately twice that of South Korean savings banks, and it has over 1300 branches, with over one-third of South Korean nationals being its users.

MGCCC is considered unique in both South Korea and the global financial sector.

MGCCC is not regulated by the South Korean financial regulatory agency FSS and serves as a financial intermediary for banks. For loans that violate regulations or cannot be mortgaged, it can be quickly disbursed here and is a major tenant in South Korea's full rental housing loans.

Even from 2020 to 2022, when all Bank of Korea's mortgage loan policies are required to be tightened, users can still easily apply for mortgage loans at MGCCC.

This also makes MGCCC the last choice for many small and medium-sized enterprises and individuals to obtain loans.

In early July, some South Korean media reported that the default rate of some branches of MGCCC exceeded 20%, leading to a run.

On July 12, Bloomberg reported that Bank of Korea would hold an interest meeting under the condition of risk. Most respondents think that Bank of Korea will not raise interest rates, especially MGCCC.

As the default rate of MGCCC increases, people's concerns about potential credit tightening are still increasing.

Huoh from Daol Investment believes that, as the South Korean government has stated, market tension related to MGCCC is likely to be manageable. But people can't help but feel uneasy

The run on Shadow banking system, which seems to make the risk detonate outside the bank, actually hurts ordinary people.

On the homepage of MGCCC, the chairman wrote in a letter to the client as follows:

After fifty years of trials and tribulations, community credit cooperatives are busy preparing for the next century. We have not stopped responding to crises and challenges, and have become a strong pillar supporting the economically vulnerable low-income groups and the bottom of society