Financial Supervisory Advisory Committee: "Must Prepare for COVID-19-Induced Changes Such as Digitalization and Trade Contraction"

Hongbeom Kim, Chairman of the Financial Supervisory Advisory Committee at the Financial Supervisory Service

[Asia Economy Reporter Kim Hyo-jin] The Financial Supervisory Service (FSS) Financial Supervisory Advisory Committee urged on the 22nd that preparations must be made for economic and social changes such as the advancement of digitalization due to the novel coronavirus infection (COVID-19), cross-border movement restrictions, and trade contraction.

The FSS announced that advisory committee members reached this consensus at the '2020 Financial Supervisory Advisory Committee General Meeting' held on the morning of the same day at the Korea Federation of Banks in Jung-gu, Seoul.

The FSS has been operating the Financial Supervisory Advisory Committee since 2012, composed of experts from various fields including academia, legal circles, media, consumer organizations, and the financial sector, with the purpose of balanced financial supervision and seeking desirable directions for financial supervision.

The committee consists of 81 advisory members across nine subcommittees: General, Banking, Small and Low-income Finance, Insurance, Financial Investment, Capital Market, Consumer Damage Prevention, Consumer Rights Protection, and Financial IT. Professor Kim Hong-beom of Gyeongsang National University’s Department of Economics serves as the chairman.

Chairman Kim and the advisory members agreed on the particularly important role of the financial sector in relation to COVID-19 and discussed this matter, deciding to pool wisdom to prepare for the ongoing uncertain situation that the Korean economy has never experienced before.

Professor Kim Hyun-wook of KDI emphasized in his keynote speech titled "COVID-19, Changes in Economic and Financial Environment and Responses" that "under new economic and financial environments such as digitalization and deglobalization, it is necessary to prepare for the possibility of economic recession due to decreased global demand and intensified inter-country conflicts caused by fragmentation of global supply chains."

Deputy Director Lee Jin-seok of the FSS explained in his presentation on "Financial Support and Financial Institution Soundness Status for Overcoming COVID-19" that "financial support is being provided in various ways such as maturity extensions, new loans, guarantees for small business owners and companies, and bond purchases through capital markets. The FSS is promoting measures such as exemption of liability for financial institution employees, inspection exemptions, and flexible financial regulations to ensure smooth financial support."

Deputy Director Lee added, "Currently, soundness indicators such as loss absorption capacity and foreign currency liquidity of financial institutions are at a good level, and we plan to strengthen monitoring of financial markets through stress tests and scenario analyses in the future."

FSS Governor Yoon Seok-heon emphasized, "Supporting the field through sufficient and prompt financial support so that the real economy can breathe is the top priority of finance."

Governor Yoon pointed out to the financial sector, "If the focus is only on risk management and the function of fund supply is reduced, this will rather accelerate economic downturn and cause credit crunch, exacerbating the so-called procyclicality problem that increases side effects."

Regarding the soundness management of the financial sector, Governor Yoon said, "From now on, it is necessary to refrain from expanding the scale and to maximize loss absorption capacity by increasing reserves and internal reserves in preparation for the prolonged COVID-19 situation."

This content was produced with the assistance of AI translation services.