South Korea will take "resolute" steps to help stabilize the financial market, if needed, amid clear indications of interest rate hikes, the nation's top regulator said Monday, source from the Yonhap.
|Yim Jong-yong (L), chairman of the Financial Services Commission, presides over a meeting on financial reform in Seoul on Nov. 28, 2016, with Zhin Woong-seob, the governor of the Financial Supervisory Service, sitting next to him. (Yonhap)|
Yim Jong-yong, chairman of the Financial Services Commission (FSC), said swings in the global financial market will likely expand due to policies by the incoming Donald Trump administration.
The U.S. is widely expected to raise the policy rate next month. Many also predict the Trump administration will push for aggressive fiscal spending, leading to inflation.
"First, (the government) will maintain the stability of the financial market and resolutely take market stabilization measures if necessary," Yim said while presiding over an interagency meeting on financial reform.
The FSC has already launched an "emergency response team" with the Financial Supervisory Service, the state financial watchdog.
Yim, tapped as the new finance minister, added that the authorities will make all-out efforts to resolve the problem of massive household debt, which is apparently the greatest risk factor facing Asia's fourth-largest economy.
Last week, the FSC said it would further tighten restrictions on group mortgage loans for newly built apartment purchases and lending by non-bank financial firms.
"The government will use every possible capability to handle the household debt problem until it is fully resolved," Yim said.
He also stressed there will be no weakening of financial reform drive despite a political crisis gripping the Park Geun-hye government. Park faces a parliamentary vote on impeachment, on allegations of being deeply involved in an abuse-of-power and bribery scandal.
At a time when the U.S. shows signs of easing finance-related regulations, it would be more difficult to enhance the global competitiveness of South Korea's financial industry if reform is further delayed, he said.
In particular, Yim said, the spread of a performance-linked pay system is an indispensable reform task for the future of South Korea's financial industry.
"Unless it's achieved, there will be no future for our financial industry," he said.
Unionized workers at local banks are fiercely opposed to the plan, saying it would only bring about reckless competition among employees and lower the quality of financial services.
Regarding the sale of Woori Bank, a leading lender here, Yim reaffirmed that the government will stay away from the management.
Earlier this month, the government announced the sale of its 29.7-percent stake in the bank to seven successful bidders. The state-run Korea Deposit Insurance Corp. still holds a 21 percent stake, though.
Yim said the government remains committed to fully privatizing Woori under appropriate conditions to maximize the retrieval of taxpayers' money injected into the bank during the 1997-98 Asia-wide financial crisis.
Meanwhile, it remains uncertain when the National Assembly will hold a confirmation hearing for Yim, as it focuses on dealing with the political issue.