Financial regulators vow to stabilize market, support vulnerable

The Korea Times

The Korea Times

Finance

Tue, October 3, 2023 | 00:50

Economy

Financial regulators vow to stabilize market, support vulnerable

Posted : 2023-01-01 16:42

Updated : 2023-01-02 16:07

From left, Financial Supervisory Service (FSS) Governor Lee Bok-hyun and Financial Services Commission (FSC) Chairman Kim Joo-hyun / Courtesy of FSS and FSC

FSC, FSS chiefs stress cooperation among authorities

By Anna J. Park

The heads of the country's top financial regulator, the Financial Services Commission (FSC), and watchdog agency, the Financial Supervisory Service (FSS), both stress that their priorities for 2023 will be on ensuring market stabilization amid heightened external uncertainties, while also supporting vulnerable groups.

FSC Chairman Kim Joo-hyun said in his New Year's message that despite the forecast for prolonged market uncertainties and declining economic growth, the government will do its best to prioritize support for the weakest groups in the economy.

"Maintaining financial market stabilization, in preparation for unstable macroeconomic conditions, will be the FSC's top priority for this year's policies, while supporting vulnerable groups, who will be facing the pain of high inflation and interest rates the most," the FSC chief said in his message.

Kim emphasized that the local financial sector has been strengthening capital reserves in order to respond to any threats that could be passed on from the real economy. He said the regulator will keep pursuing various market stabilization measures in corporate bonds and commercial papers, as the FSC did during the second half of last year.

At the same time, the FSC will closely monitor potential risks stemming from corporate businesses as well as household debt, so that risk factors in these sectors will not add more burden on the financial system.

"Loan-to-value (LTV) ratio regulations will be eased for those who purchase a home to actually live in, and liquidity will be provided to construction companies through purchases of project financing (PF) asset-based commercial papers (ABCP) by state-run financial institutions," the chairman added.

Kim also stressed support for future growth engines, such as venture capital, accelerated digitalization, financial data infrastructure and system improvements. These will be expanded, as the government aims to continue the growth momentum of the economy.

"The government plans to provide new opportunities so that the financial sector continues to grow into an advanced system, which could match the Korean economy's global status among the top 10 economies of the world," he highlighted, vowing to closely cooperate with relevant ministries and financial authorities, including the finance ministry, the Bank of Korea and the FSS.

FSS Governor Lee Bok-hyun's message for this year's shared common goals for the future is to maintain stability in the financial system, while strengthening foundations for the progress of the economic and financial sectors.

"The FSS aims to maintain the stability of the financial system by preemptively responding to risk factors stemming from complicated layers of multiple crises," Lee stressed, vowing to strengthen monitoring and stress tests on both internal and external risk factors to ensure appropriate responses to prevent further crises in the financial industry.

High-risk assets, such as real estate project financing and overseas alternative investments, will be monitored more closely, Lee added, vowing to increase partnerships among relevant ministries and agencies.

While the FSS chief also vowed to support digitally-led new growth in the financial industry, he did send warning messages to the market that the FSS will sternly respond to any moves to manipulate capital markets to secure transparency of the financial sector for consumer protection. Lee emphasized the need to heighten internal controls within financial companies so that they have the largest share of responsibilities for their ethical management.

annajpark@koreatimes.co.kr