Market expectations high for new financial regulators

By Kang Seung-woo

Appointment of a duo at top posts of the nation’s financial regulator is leading to expectations that the government will be more active and effective in reigning in skyrocketing household debt.

President Moon Jae-in appointed Financial Services Commission (FSC) Secretary-General Kim Yong-beom as its new vice chairman Thursday. The appointment does not require a parliamentary confirmation hearing.

FSC Chairman Choi Jong-ku, a former deputy finance minister, took office on Wednesday.

“The top two financial regulators, who have decades-long experience at the finance ministry under their belts, are offering bright outlook that the government could slow down the pace of the household debt increase,” said a market observer.

The nation’s household debt, already the highest among emerging markets, is nearing about 1,400 trillion won ($1,246 billion) this year. It has crimped private consumption and made it harder for the central bank to raise its key interest rate.

Choi also vowed to take tougher actions to contain the issue in his inauguration speech.

“As house debt is deeply linked to our economy’s structural factors, such as the property and welfare systems, I will actively tackle the issue,” he said.

The FSC is also expected to more focus on restructuring some of ailing business sectors.

In that respect, the vice chairman appointment is anticipated to add fuel to the government’s drive.

Kim began his public career in 1987 at the finance ministry and took key posts, including director of banking system division and deputy secretary for economic policies in the presidential secretariat. The native of Muan, South Jeolla Province has served in various FSC posts, including those handling the capital market and financial policy. He also served as a senior economist at the World Bank for five years in 2000.

Behind his wealth of career, Kim has been involved in the government’s impressive policies pertaining to household debt and corporate restructuring.

In 2015, he masterminded the government’s loan conversion scheme that guided banks to convert to fixed rate, amortized loans from floating rate, or interest-only ones.

He was also involved in introduction of primary collateralized bond obligations (P-CBO) to support cash-strapped companies.

“Kim, an official well versed in finance, is best suited to carry out the new government’s financial policy as he is equipped with expertise, professionalism, planning and analytic capabilities, and communication skills,” presidential spokesman Park Soo-hyun said in a briefing.

Kim majored in economics at Seoul National University and received his doctorate in economics from George Washington University.