The country’s top financial regulator designate vowed on Tuesday stronger protection of consumers and market stability by bringing high household debt under control.
Yim Jong-yong, the nominee for the chairman of the Financial Services Commission, picked household debt as the most pressing issue that is weighing on the economy.
“The household debt problem requires tremendous responsibility (from the regulator) and risk management,” he said at a confirmation hearing.
The FSC needs to further strengthen its management of household debt, backed by both sound macro and microeconomic policies, he added.
FSC Chairman nominee Yim Jong-yong takes an oath during his parliamentary confirmation hearing at the National Assembly on Tuesday. (Chung Hee-cho/The Korea Herald)
The hearing came three weeks after the former vice finance minister and NH Financial Group chairman was named as the FSC chief.
In addition to the country’s slow economy, which the government forecast to reach 3.8 percent this year, the snowballing household debt has been threatening its outlook, while deflation concerns loom.
Household borrowings surpassed 1,000 trillion won ($895 billion) as of mid-2014, according to government data.
Yim said the debt level has been increasing at a fast pace, threatening the financial system, adding that FSC would have to tackle this problem before seeing the economy recover and take off.
The chairman designate said the debt problem required cooperation from the Finance Ministry and the Bank of Korea.
The regulator is in talks with the Finance Ministry and the central bank to set up a consultative body to manage household debt.
Yim continued to say that the FSC must move on from its current “coaching” position to become an “umpire” who manages and promotes a level-playing field.
Observers said Yim’s comment referred to boosting financial monitoring, since an umpire is seen as an authority entitled to correct games, should the players commit a foul.
“We will strengthen regulations for consumer protection and market stability, and make reasonable revisions to the overly restrictive policies in accordance to the global standards and the financial firms’ capacity,” Yim told lawmakers.
The nominee also revealed his stance on the controversial merger between Hana Bank and Korea Exchange Bank, saying that he would approve the merger only if Hana Financial Group reaches an agreement with KEB’s labor union.
In 2003, U.S. private equity Lone Star acquired Korea Exchange Bank for 1.4 billion won. It sold KEB to Hana Bank for a profit of 4.7 trillion won nine years later.
By Chung Joo-won (
joowonc@heraldcorp.com)