FSC chairman vows to stably navigate pandemic-stricken market next year

Chairman of the Financial Services Commission (FSC) Eun Sung-soo speaks during an online press conference held at the Government Complex in Seoul, Monday. / Courtesy of FSC

FSC chief said no.1 priority next year is overcoming COVID-19

By Anna J. Park

The chief of the nation's financial regulator vowed to continue to take all necessary measures to stabilize Korea's pandemic-stricken market conditions, stressing the number one priority of the financial authority in the next year will be overcoming the COVID-19 crisis.

Speaking at this year's year-end press conference, which was held online due to the pandemic, Financial Services Commission (FSC) Chairman Eun Sung-soo said the financial regulator will swiftly and aggressively respond to the market's changing needs, just as it has throughout the year with a stimulus package program in place worth more than 175 trillion won ($160 billion).

Eun said the financial market is facing uncharted territory with the pandemic crisis, as it has to solve mutually-conflicting policy goals, such as providing urgent and ample liquidity to local businesses while keeping the country's household debt growth rate under control as well as devising soft-landing exit strategies of the current expansive financial policies. The chairman stressed the FSC is doing its best to achieve the three key goals, yet asked the public to take a longer perspective for the goals to be realized.

“The government swiftly responded to the market with more than 175 trillion won worth of stimulus packages and the money is out in the market. However the easing monetary policy is seemingly in conflict with keeping the household debt ratio steady,” the Chairman said during the press conference.

“Faced with multiple layers of conflicting policy goals, the FSC is putting the utmost priority on overcoming COVID-19 crisis. (…) We will keep these multiple-pronged policy goals in mind, yet it will require us to take a mid- and longer-term perspective to ultimately evaluate whether the goals will be achieved. Instead of assessing the goals' improvements monthly, we hope to take a longer stance to make sure the goals are achieved,” the FSC head added, stressing the financial authority will keep a close watch on asset market prices, especially in real estate markets.

Eun also said the financial regulator will continue to support domestic companies in crisis using a two-track approach; businesses that have suffered temporarily due to the pandemic will be provided ample liquidity for their survival, while firms that have been insolvent prior to the pandemic crisis will be induced to structural reorganization, such as selling off their affiliates, to make them sound again.

Mentioning the OECD's prediction that Korea's economic growth outlook of minus 1.1 percent for this year will be the best achievement among OECD member countries, Eun said such a positive outcome is a combined result of Korean companies' solid performances, the country's well-controlled pandemic quarantine efforts and local and foreign investors' belief in Korea's economic recovery.

Improving uneven playing field for short-selling

Regarding the stock markets' short-selling that will be resumed again starting in March, the FSC chief said the financial regulator is still widely listening to experts and retail investors' views on improving the system. He said those who commit illegal short-selling will be faced with much stronger punishments from next year, while the financial authority will strictly review financial institutions' short-selling practices by requiring them to keep short-selling records for five years.

Also, Eun said the financial regulator is currently looking into a way that would allow some retail investors, when they're qualified as professional investors, to be allowed to participate in short-selling.