New FSC chief vows to stabilize financial market in inauguration speech

Finance

New FSC chief vows to stabilize financial market in inauguration speech

Published: 31 Jul. 2024, 18:54

Kim Byoung-hwan, the new chief of the Financial Services Commission, arrives at the government complex in downtown Seoul to make his way into office for the first time on Wednesday. [YONHAP]

The new head of Korea's financial regulator highlighted a need to stabilize the market Wednesday, calling for increased efforts to rein in growing household debt and minimize potential fallout from failed real estate project financing (PF) loans.

Kim Byoung-hwan, the new chief of the Financial Services Commission (FSC), also vowed thorough efforts to minimize risks amid growing hopes for rate cuts and recovery in housing prices.

“Stabilizing the financial market is the most important mission the Financial Services Commission is entrusted with,” Kim said in his inauguration speech.

"[We] must resolve the weakness the market has accumulated and work to make sure that new risks will not spread,” he added.

Kim took office that day after going through a parliamentary confirmation hearing last week. He replaced Kim Joo-hyun.

The former vice finance minister said he would work to eliminate what he called “four major risks” — real estate PF loans, household debts, loans to small businesses and the fiscal soundness of nonbank financial institutions.

“Particularly, [we] will thoroughly manage household debt by preparing a contingency plan in advance so that any potential risk will not expand amid hopes for rate cuts and recovery in the property market,” said Kim.

To this end, the financial regulator will seek to promote “equity financing” in each sector, insisting “the system that depends excessively on loans is a root cause of market instability.”

Household loans extended by banks in Korea have grown for three consecutive months since April, according to earlier reports, with outstanding household loans from banks reaching more than 1,115 trillion won ($809 billion) as of the end of June.

Kim also stressed the need to strengthen market discipline.

“Any market cannot be maintained as soon as it is considered unfair. Any market player, regardless of who it may be, must face corresponding consequences or punishment [if they have] taken any illegal profit,” the new FSC chief said.

Kim added the agency would “strengthen its preventive steps and post-fact sanctions by carefully studying illegal and unfair practices in each financial sector, such as incomplete sales, illegal private financing and illegal stock short selling.”

Yonhap