Candidate Kim Byunghwan: "Active Management of Household Debt... Need for PF Equity Capital Regulation"

Submission of Personnel Hearing Materials to the National Assembly Political Affairs Committee... Personnel Hearing on the 22nd
"Spread of Interest Rate Decline Expectations, Increase in Housing Purchase Sentiment... Concerns over Expansion of Household Loan Growth"

Kim Byung-hwan, the nominee for Financial Services Commission Chairman, is answering questions from the press as he arrives at the confirmation hearing office set up at the Korea Deposit Insurance Corporation in Jongno-gu, Seoul on the 5th. Photo by Kang Jin-hyung aymsdream@

Nominee for Financial Services Commission Chairman Kim Byung-hwan stated that he will closely monitor market conditions and take a more proactive approach to managing household debt. He identified household debt, real estate project financing (PF), debt of small business owners and self-employed individuals, and the soundness of the secondary financial sector as policy priorities.

In materials submitted to the Political Affairs Committee ahead of the parliamentary confirmation hearing scheduled for the 22nd, Kim said, "Recently, household loans have continued to increase, centered on bank mortgage loans and policy loans. If expectations of interest rate declines spread and housing purchase sentiment rises, there is concern that the increase in household loans will accelerate."

To address the real estate PF issue, he responded that regulations on developers' equity capital, which currently stand at only 3-5%, activation of REITs, and tax support are necessary. Kim explained, "The fundamental problem in the current real estate PF market is the low capital and high leverage financing structure and the lack of consideration of business feasibility by PF financing stakeholders," adding, "The Ministry of Economy and Finance, Ministry of Land, Infrastructure and Transport, and other related ministries plan to review institutional improvements together."

Regarding the soundness of the secondary financial sector, he assessed that the possibility of a bank run is very low. On the issue of transferring the authority to manage and supervise Saemaeul Geumgo, where a bank run occurred, to the Financial Services Commission, he expressed opposition, stating that management and supervision should be strengthened through cooperation among related agencies.

He answered, "Considering the current financial market conditions and the soundness and liquidity of financial companies, the possibility of a bank run in the secondary financial sector is low," and added, "Management and supervision of Saemaeul Geumgo should focus on close cooperation and coordination with related agencies based on the memorandum of understanding already signed."

On the financial company accountability framework, which has been in effect since July, he expressed a fundamental stance. Kim said, "It is a system for CEOs and responsible executives to clearly recognize and execute internal controls over their respective duties as their responsibility," and added, "If effective internal controls are implemented, it is expected that a significant portion of financial accidents can be anticipated."

Meanwhile, he also took a cautious stance on raising the maximum interest rate for loan businesses and allowing spot cryptocurrency exchange-traded funds (ETFs). He responded, "If the statutory maximum interest rate is raised, there is a concern that consumers' interest burdens will increase, so a cautious approach is necessary." He further argued, "Regarding spot cryptocurrency ETFs, it is necessary to approach the matter by comprehensively reviewing financial market stability, the soundness of financial companies, investor protection aspects, and global trends."