Financial policy won't be swayed by presidential poll: FSC chief

Korea's financial regulator will try to ensure its policy will not be whiffled by the country's presidential election slated for December, a top regulator said Tuesday.

"The government will not act to undermine the autonomy of the free market," Gov. Kim Seok-dong of the Financial Services Commission (FSC) told reporters at a seminar organized by the Economist held in Seoul.

"We intend to keep the goal and spirit of protecting consumers and supporting the real economy without being swayed by external or internal conditions," he said, urging foreigners to beef up their investment in Asia's fourth-largest economy.

Kim cited the potential risk of mounting household debt as a major threat to the economy, though the risk is manageable and should not be considered for a mitigation using taxpayer's money.

"As for now, the FSC has given full discretion to commercial lenders, in which they can offer debtors a longer maturity, and we are looking for ways to help debtors repay their mortgages against falling property prices," he said.

The country's household debt reached 992 trillion won ($814.5 billion) as of end-June, spawning deep concern over a chain reaction of defaults.

Kim forecast the protracted eurozone debt crisis will have a limited impact on the South Korean economy.

"Europeans invest less in Korea than those from other countries and so far I haven't seen any signs of them exiting our market in a hurry," he said.

The FSC chief said that ample foreign reserves have been a good cushion against financial jolts and the banking sector has secured a safety net to brace for a foreign-currency liquidity crunch.

As of end-June, South Korea is the world's seventh-largest holder of foreign exchange reserves, which came in at $314.4 billion as of end-July, according to the Bank of Korea. (Yonhap)