By Lee Hyo-sik
Staff Reporter
The nation's top financial regulator said Friday that he will slow the tempo of market boosting measures, citing significant easing in the local financial sector amid the bullish stock market and the strengthening Korean won.
Financial Services Commission (FSC) Chairman Chin Dong-soo said in a Seoul forum that the domestic financial market has stabilized to a greater extent on the government's prompt response and the easing of the global financial market turmoil. ``The pace of the economic downturn has slowed this year and the expectations are growing for an earlier economic rebound among market participants. I think the second quarter performance will be stronger than previously thought, bolstered by rising industrial production and consumption.''
Chin, however, said the regulator will continue to maintain the current policy stance for the time being in the face of the continuing uncertainties about the sustainability of the current economic recovery and financial market stability.
``But with improved financial market conditions, we will consider adjusting our market support measures,'' the chairman said, citing the FSC's recent move to tighten lending standards for housing loans in Seoul and its adjacent areas to curb rises in real estate prices. Largely fueled by ample liquidity, home prices in southern Seoul and its surrounding areas have increased sharply over the past few months, reaching pre-crisis levels.
He said now is the time to facilitate the ongoing economic rebound and control side effects from a range of countermeasures introduced to combat the global financial crisis, indicating the regulator will soon tighten rules and do away with market boosting steps.
His remarks come at a time when Strategy and Finance Minister Yoon Jeung-hyun and other policymakers are scrambling to come up with an exit strategy from an expansionary fiscal and monetary policy, on improving economic conditions. Yoon has hinted at raising taxes and implementing other tightening measures to restore deteriorating state coffers.
Meanwhile, Chin stressed the importance of the capital market in nurturing high-risk and high-return industries and the ``green'' growth sector. ``As a lesson from the international financial market debacle, our capital market should play a more important role. The development of the capital market is essential to lessen the risks associated with the bank-centered financial system and to raise necessary funds in a more cost effective and efficient manner,'' the chairman said.
He then said the Capital Market Consolidation Act, which went into effect in February, has eased financial regulations, revitalized the capital market and better projected investors. ``We will continue to make an effort to advance the domestic financial market and ensure that market participants play by fair rules and investors are adequately protected.''