[Reporter’s Notebook] Financial Influence Grows, But Only One FSC Official Dispatched to the Office of the Economic and Financial Secretary

Frequent and Impactful Financial Issues
Only Three FSC Officials Dispatched to the Presidential Office
Just One in the Current Administration's Office of the Economic and Financial Secretary
Importance, Not Size, Should Determine Staffing

'Legoland incident, Taeyoung Construction workout, real estate project financing (PF), equity-linked securities (ELS), short selling, corporate value-up programs...'

These are important economic issues that have emerged in the past 1-2 years. More precisely, they are 'financial' issues. This shows that the ripple effect of the financial market has grown, and its scale and influence have significantly increased. This also means that the responsibility and role of the Financial Services Commission (FSC), which is in charge of financial policy, have grown compared to the past.

The FSC was established in 2008 by integrating the Financial Supervisory Commission, which was created after the 1997 (IMF) foreign exchange crisis to oversee banks, securities, insurance, and stabilize the financial market, and the Financial Policy Bureau of the Ministry of Strategy and Finance (now Ministry of Economy and Finance). As can be seen from the history of the FSC, it has always backed up the system to prevent systemic crises whenever a crisis occurs in the financial market. Especially since the inauguration of the Yoon Seok-yeol administration, the FSC has stepped in as a relief pitcher regarding financial issues.

Two years ago, during the Legoland incident, Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho announced an emergency measure worth '50 trillion + α', but the detailed measures were led by the FSC. The 'PF restructuring' (such as the Taeyoung Construction workout), which is considered a path never taken before in history, is also being led by the FSC. Even though the Saemaeul Geumgo 'bank run' and the Tmon and Wemakeprice incidents are strictly not under the FSC's jurisdiction, it directly intervened.

There is a reason why the FSC always appears when incidents occur in the financial market. Financial policy is a field where expertise stands out. Unlike the Ministry of Economy and Finance, it has a strong micro-policy nature, and the process of adjusting interests is very complex. For example, Taeyoung Construction, which is undergoing a workout, has about 600 creditors. The FSC is an organization that acts like a referee at the crossroads where money flows?from supervising financial companies, corporate restructuring, corporate and household financing to supporting low-income finance and venture companies. Therefore, as the financial market grows, the role of bureaucrats in charge of financial policy becomes even more important.

Last month, the head of the accounting team at the FSC was dispatched to the Presidential Office. Currently, a total of three civil servants (at the manager level) are working in Yongsan. Among them, only one works in the Office of the Economic and Financial Secretary. This contrasts with the previous administration, which had two FSC civil servants in the Office of the Economic and Financial Secretary. Considering the large and small crises in the financial market over the past 1-2 years, this is hard to understand.

Inside and outside the financial industry, there are concerns about the fact that there is only one FSC civil servant in the Office of the Economic and Financial Secretary. For example, Korea's bond market trading volume surged from 26 trillion won (August 2008) to 102 trillion won (August 2024), and during the same period, deposits for derivative transactions also sharply increased from 7.4 trillion won to 12 trillion won.

The scale of the financial market has completely changed, and considering the frequent occurrence of financial issues amid changes in monetary policy, the market's concerns are understandable. The FSC explained that it usually dispatches 1-2 people to the Office of the Economic and Financial Secretary. The number of personnel in the Office of the Economic and Financial Secretary should be determined not simply by the size of the ministry but by assessing the expertise of the policy.