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‘Banking Sector Interest Profit’ Controversy... Financial Supervisory Service Chief Says “No Intention to Interfere with Market Interest Rates”

Financial Supervisory Service Chief Holds Meeting with Research Institute Heads on the 23rd
Lee Bok-hyun: "Banks Clearly Have a Public Function"

‘Banking Sector Interest Profit’ Controversy... Financial Supervisory Service Chief Says “No Intention to Interfere with Market Interest Rates” Lee Bok-hyun, Governor of the Financial Supervisory Service / Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Song Seung-seop] Lee Bok-hyun, Governor of the Financial Supervisory Service (FSS), firmly stated, "We have no intention to interfere with the market's autonomous interest rate adjustment mechanism, nor can we interfere."


After attending a meeting with heads of research institutions held at the Westin Chosun Hotel in Jung-gu, Seoul on the 23rd, Governor Lee told reporters, "It is neither feasible nor possible to unilaterally dictate how interest rates should be set."


At a meeting with domestic bank presidents on the 20th, Governor Lee had said, "Criticism of banks' excessive profit-seeking is growing," and added, "It is necessary to calculate and operate interest rates based on rational and transparent standards and procedures." This sparked voices in the financial sector claiming it was de facto government-controlled finance.


Regarding this, he said, "According to the Banking Act and related regulations stipulated in our Constitution and laws, banks clearly have a public function," and added, "In relation to that, we as the supervisory authority have certain roles and powers, so we exchange opinions based on that."


Concerning the proposal by Kwon Seon-dong, floor leader of the People Power Party, who suggested that banks share the pain and be given incentives accordingly, Governor Lee explained, "There have been no specific or direct consultations." He continued, "Banks are responsible not only for shareholder profits under the Commercial Act but also for public functions," and said, "Protecting financially vulnerable groups is necessary for the safe and sound co-growth of society, which seems to be the reason for such remarks from the political sphere."


He also said, "I believe shareholders fully understand (the banks' public role), and the executives of banks and first-tier financial institutions share that sentiment."


Regarding the Financial Regulation Innovation Support Task Force (TF), he said, "I have heard that not only the Financial Services Commission Chairman but also the nominee emphasize deregulation and innovation," and added, "Since the Financial Services Commission holds legal authority and powers over policy and institutional aspects, we are in a position to cooperate and will make sure to communicate accordingly."


On the issue of the exchange rate surpassing 1,300 won, he said, "We are closely consulting within the financial authorities regarding the long-term liquidity of foreign currency," and added, "We are preparing through stress tests and various other methods."


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