SEOUL, Mar. 10 (Korea Bizwire) — The nominee for South Korea’s top financial regulator urged local financial firms on Tuesday to take stricter reform measures for what he describes a “second take-off,” and vowed heightened risk management on ballooning household debts.
“The financial industry is facing rapid environment changes, such as a low interest rate trend, an aging society and finance-IT convergence, but it has failed to find a new growth engine and lacks dynamics and innovation,” Yim Jong-yong, the Financial Services Commission (FSC) chairman designate, said in a parliamentary confirmation hearing.
“Now is the right time and the last opportunity (for the financial industry) to make financial reforms and break through the critical situation,” he said. “I will do my best to turn this crisis into an opportunity.”
Yim was named by President Park Geun-hye last month to take the helm of the country’s top financial authority.
Yim, the former chairman of Nonghyup Financial Group, said he will keep the financial deregulation drive on the front burner in order to boost autonomy and give more room to financial players to do their business without authoritative intervention. ‘Deregulation’ is one of the biggest administrative policy slogans of the Park Geun-hye government.
“I will have (the FSC) change its role from a ‘coach’ who meddles in everything to an ‘umpire’ who manages and fosters the playing field,” Yim said.
He said the FSC and the Financial Supervisory Service (FSS), the financial oversight agency, will carry out their own internal reforms to establish a self-controlling organization.
Yim said that mounting household debt is the biggest “outstanding issue” in the South Korean economy that needs to be controlled.
Household loans surpassed the 1,000-trillion won (US$895 trillion) mark in mid-2014, sounding an alarm that it could pose a huge threat to Asia’s fourth-largest economy.
“I know that household debt is the biggest outstanding issue in Korea and I will take responsibility for controlling and managing risk factors,” he said. “As it is also necessary to take macroeconomic measures in tackling the household debt problem, I will cooperate with the finance ministry and the Bank of Korea.”