Yoon Seok-heon: "Liquidity Concentrated in Crude Oil ETNs... Financial Firms Must Provide Medium-Yield Products"

[Image source=Yonhap News]

[Asia Economy Reporter Park Jihwan] Yoon Seokheon, Governor of the Financial Supervisory Service, emphasized that "low-interest liquidity can pose a risk within the financial system" in relation to Donghak Ants and large-scale net purchases of crude oil Exchange-Traded Notes (ETNs), and stated, "Financial companies need to step up and create medium-yield products."

On the 28th, Governor Yoon pointed out at a press conference marking his 2nd anniversary in office, "There is a lot of liquidity in Korea, interest rates have fallen, and real estate is being restrained, so a breakthrough is needed. However, since financial companies are not supporting pension assets and others, this is manifesting through Donghak Ants and ETNs."

Governor Yoon said, "I also think it is becoming a systemic risk," and stressed, "If institutional measures are put in place so that when the ETN premium exceeds 20%, single-price trading is conducted, and when it exceeds 30%, trading is suspended, the funds will move elsewhere."

He called for a role for financial companies. He criticized, "Financial companies should create medium-yield, medium-risk products to neutralize (customers' demands), but financial investment companies are unable to do so, and banks are selling such products as they are, getting caught up in incomplete sales."

He added, "There are also criticisms that the Financial Supervisory Service lacks personnel for continuous monitoring. We will pay attention to that going forward," and emphasized, "Internally, there are teams related to soundness and cross-industry teams that assess the risks of funds, so we will monitor by each sector and establish an overall system."

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