[2024 National Audit] Kim Byunghwan "Increasing Internal and External Uncertainties and Difficulties... Full Efforts for Financial Market Stability"

Financial Services Commission Chairman Attends National Assembly Political Affairs Committee Audit
"Manage Annual Household Debt Growth Rate Within Potential Growth Rate"
Swift Approval of New Internet Banks... Establishing Regulations Suitable for Digital Transformation
Developing Institutional Improvements to Prevent Recurrence of ELS and TimeF Incident

Financial Services Commission Chairman Kim Byung-hwan is attending and speaking at the Economic Ministers' Meeting and the 1st Investment Activation Ministers' Meeting held at the Government Seoul Office in Jongno, Seoul on the 2nd. Photo by Jo Yong-jun jun21@

Kim Byung-hwan, Chairman of the Financial Services Commission, stated that measures to stabilize household debt, such as the stress Debt Service Ratio (DSR), are being gradually implemented to ensure loans are made within repayment capacity. He also mentioned that institutional improvements are being prepared to prevent recurrence of incidents related to equity-linked securities (ELS) and the Tmon-Wemakeprice (Timep) case.

On the 10th, Chairman Kim attended the National Assembly’s Finance and Economy Committee audit and explained the main policy directions amid increasing external uncertainties such as major countries’ monetary policy shifts, the U.S. presidential election, and the Israel-Hezbollah conflict. Domestically, he noted that household debt, real estate project financing (PF), and difficulties faced by low-income and vulnerable groups are intensifying.

The Financial Services Commission plans to manage the annual increase rate of household debt within the nominal growth rate and will continuously promote light auctions and restructuring for real estate PF. Chairman Kim said, "Household loans are being stabilized step-by-step through measures such as stress DSR," adding, "For real estate PF, based on business feasibility evaluations, distressed projects will undergo light auctions and restructuring, while funds will be smoothly provided to sound projects."

Regarding the soundness of the secondary financial sector, he added, "Proactive delinquency management, strengthened loan loss provision standards, and capital expansion are also being implemented as preemptive measures."

He also stated that efforts are being concentrated on enhancing the competitiveness of the financial sector and advancing the capital market. The Financial Services Commission has been promoting services such as online loan switching and the conversion approval of regional banks to commercial banks to provide better services at lower costs.

Chairman Kim said, "The new licensing process for internet-only banks is also being expedited, and efforts are underway to establish a regulatory system suitable for digital transformation," explaining, "To enhance the use of generative AI in the financial sector, network separation regulations will be gradually rationalized, and a financial security system adapted to changing conditions will be established."

He conveyed that measures are also being pursued to establish a fair and transparent market order, improve capital market accessibility, and promote shareholder value-oriented corporate management for the advancement of the capital market.

Chairman Kim said, "Regarding corporate value-up support, listed companies are now able to disclose 'corporate value enhancement plans' to induce market evaluation and investment," adding, "Sanctions against unfair trading have been strengthened, and following the amendment of the Capital Market Act last September, the establishment of a short-selling electronic system will be smoothly implemented."

The Financial Services Commission also revealed that it is preparing institutional improvements to prevent recurrence of the Hong Kong H-Index ELS and Timep incidents. The government has implemented protective measures such as voluntary compensation for victims and liquidity support amounting to 1.6 trillion won.

Additionally, to eradicate illegal private loans, amendments to the Loan Business Act, including invalidation of antisocial loan contracts, are being pursued. Following the enforcement of the Virtual Asset User Protection Act, follow-up measures such as establishing an unfair monitoring system are being steadily implemented, and further institutional improvements, including a second phase of legislation, are under consideration.

The role of supporting the real economy, such as expanding the support targets of the New Start Fund and supporting advanced industries, will also be continuously strengthened. Chairman Kim said, "To reduce debt burdens for low-income earners and self-employed individuals, the support targets of the New Start Fund will be expanded, and recovery will be supported by linking debt adjustment with employment and re-startup," explaining, "To support advanced industries, a low-interest loan program worth 17 trillion won for semiconductors and other advanced industries has been newly established, and a policy finance program supporting all fields of artificial intelligence (AI) worth 3.5 trillion won has also been prepared."