[Political Affairs Committee Report] "Discovering Additional Support for Small Business Owners Beyond 125 Trillion Won + α"

Financial Services Commission's Work Report to the National Assembly's Political Affairs Committee on the 28th
Reducing Vulnerable Borrowers' Burden with Safe Conversion Loans for Household Debt
Promoting Growth of the Virtual Asset Market through the 'Digital Asset Basic Act'

[Image source=Yonhap News]

[Asia Economy Reporter Sim Nayoung] On the 28th, Kim Juhyun, Chairman of the Financial Services Commission, announced during the National Assembly's Political Affairs Committee briefing that additional financial support measures for small business owners will be developed, and through financial regulatory innovation, a platform will be created for players who can lead the global financial market to emerge. He stated that household debt will be managed by alleviating the burden on vulnerable borrowers through the Safe Conversion Loan. He also announced plans to grow the virtual asset market through the "Digital Asset Basic Act."

In his greeting, Chairman Kim said, "In a situation where high inflation, high interest rates, and economic slowdown are intensifying difficulties for people's livelihoods, we will provide meticulous support to vulnerable sectors through a program worth 125 trillion won plus alpha," adding, "Since the difficult economic situation is likely to continue, if necessary, we will also develop additional measures and consult with the National Assembly."

The Financial Services Commission's 125 trillion won plus alpha program includes the New Start Fund (30 trillion won), which reduces the debt of small business owners who have been overdue on principal and interest payments for more than 90 days by up to 60-90%, the expansion of the Safe Conversion Loan supply that converts variable interest rates to fixed rates (from 40 trillion to 45 trillion won), and measures to expand the limit of low-interest policy jeonse loans for reducing housing costs for actual demanders (from 200 million to 400 million won).

Regarding financial regulatory innovation, Chairman Kim stated, "We will create institutional conditions so that players who can lead the global financial market can emerge in our financial industry as well." The Financial Services Commission has selected 36 priority tasks, including ▲ easing restrictions on subsidiary investments ▲ relaxing regulations on ancillary businesses of financial companies ▲ expanding the scope of information provision for the advancement of MyData ▲ reviewing the allowance of financial companies to engage in virtual asset-related businesses, and is discussing regulatory easing at the "Financial Regulatory Innovation Meeting" led by private experts.

Household debt will be smoothly adjusted through the Debt Service Ratio (DSR) and installment repayment stabilization, and to prepare for the possibility of defaults among vulnerable borrowers during the interest rate rise period, a 45 trillion won long-term, fixed-rate refinancing program called the Safe Conversion Loan and a 50-year ultra-long-term policy mortgage will be introduced. The financial authorities have encouraged banks to expand their loss absorption capacity by increasing the loan loss provision ratio (the extent of loan loss provisions for non-performing loans) in the financial sector from 165.9% at the end of last year to 181.6% in the first quarter of this year.

Regarding virtual assets, Chairman Kim said, "We will participate in discussions on the enactment of the 'Digital Asset Basic Act' to enable growth based on investor trust," and added, "Even before legislation, we will strengthen the supervision of the Financial Intelligence Unit (FIU) to prevent money laundering using virtual assets." Security-type virtual assets will be issued under the regulatory framework of the "Capital Markets Act," which has investor protection measures, while non-security types will be institutionalized through the "Digital Asset Basic Act," centered on bills pending in the National Assembly, to regulate issuance, listing, and prevention of unfair trading.