Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
Korea needs to raise key rate further: FSC chairman nominee
Koh Seung-beom, nominee for chief of the Financial Services Commission, answers questions from lawmakers during a National Assembly confirmation hearing in Seoul, Friday. Yonhap
By Lee Min-hyung
By Lee Min-hyung
Financial Services Commission (FSC) Chairman nominee Koh Seung-beom reiterated his hawkish viewpoint on the nation's monetary policy, saying the recent key rate hike from the Bank of Korea (BOK) is not enough to resolve the deepening financial imbalance.
“Personally, increasing the rate only once will not help alleviate the nation's financial imbalance, and of much more importance is the future policy direction,” Koh told lawmakers during a National Assembly confirmation hearing. As widely expected, the BOK raised the benchmark rate by 25 basis points to 0.75 percent on Thursday for the first time in almost three years.
He served as the BOK's monetary policy board member from April 2016 to August 2021 before having recently been nominated as the new leader of the watchdog.
While he didn't specify the timing of an additional rate increase by the central bank, Koh expected the BOK to do so “in the near future” due mostly to the overheated asset market and surging household debt in the post-coronavirus period.
“Talks are underway that the U.S. Fed will soon start tapering, and it may bring forward the timeline for its rate hike,” he told lawmakers at the Assembly. “The BOK is expected to raise the rate further in consideration of such external factors as growing household debt and rising asset prices.”
When asked about his possible available policy plans to curb snowballing household debt, the nominee of the FSC chief reaffirmed his strong willingness to keep introducing a set of tough regulations.
“We are going to thoroughly supervise the market to ensure that the surging household debt will not hurt the stability of the financial market,” he said. “The FSC will keep enhancing the efficiency of the already-introduced policies, and if necessary, we plan to pursue additional ones.”
Meanwhile, the nominee also hinted at the possibility of delaying principle and interest payments for loans taken out by the self-employed and small business owners amid the fourth wave of the pandemic. Earlier, the authority introduced the financial benefit for groups vulnerable to pandemic financial shock, and its expiration falls at the end of September.
“We need to take into consideration their difficulties stemming from the toughened quarantine measures here, and will seek supplementary measures,” he said.
Regarding cryptocurrency-related issues, the nominee Koh said the FSC will not delay the timeline for accepting reports on their business activity. All crypto exchanges are required to submit documentation that includes commitment on the prevention of money laundering to the FSC by Sept. 24 after receiving an information security management certification.
Only one exchange, Upbit, has so far done so, which sparked concern that other exchanges may face mass shutdowns.