Yoon Seok-heon, Financial Supervisory Service Chief: "Financial Sector Should Refrain from Expanding Scale and Pursuing High Profits"

Yoon Seok-heon, Governor of the Financial Supervisory Service (Photo by Yonhap News)

[Asia Economy Reporter Kim Hyo-jin] Yoon Seok-heon, Governor of the Financial Supervisory Service (FSS), said on the 22nd that the financial sector should "refrain from expanding its scale from now on and increase provisions and internal reserves to maximize loss absorption capacity in preparation for the prolonged COVID-19 crisis."

Governor Yoon attended the '2020 Financial Supervisory Advisory Committee General Meeting' held at the Korea Federation of Banks in Jung-gu, Seoul, on the morning of the same day, and said, "Although the soundness of financial companies is currently at a good level, if the difficulties in the real economy caused by COVID-19 prolong, the credit risk of marginal borrowers may materialize, leading to financial market instability."

He also emphasized, "In a low-growth and low-interest financial environment, it is necessary to be cautious about excessive pursuit of high returns not only by consumers but also by financial companies themselves," adding, "While meeting investors' needs, efforts should also be made to establish a culture of complete sales of financial products and to protect consumers."

Governor Yoon pointed out, "Supporting the field through sufficient and prompt financial support to help the real economy breathe is the top priority of finance," and warned, "If the function of fund supply is reduced by focusing only on risk management, it may accelerate economic downturn and cause credit crunch, worsening the so-called procyclicality problem."

The Financial Supervisory Advisory Committee agreed with Governor Yoon's emphasis on the role and responsibility of the financial sector in overcoming the COVID-19 crisis and urged preparation for economic and social changes such as digitalization progress, cross-border movement restrictions, and trade contraction due to COVID-19.

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

The FSS has been operating the Financial Supervisory Advisory Committee since 2012, composed of experts from academia, legal circles, media, consumer groups, and the financial sector, aiming to perform balanced financial supervision and seek 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.

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