55 Days Under Acting Leadership... Financial Supervisory Service Chief Remains Uncertain

Major Issues Like Cryptocurrency Regulation Stalled...Urgent Need for Authorities' Supervision

[Asia Economy Reporter Kwangho Lee] The leadership vacancy at the Financial Supervisory Service (FSS), often referred to as the "financial prosecutor," is unusually prolonged. With major challenges such as the record-high household debt and cryptocurrency regulations piling up, there are concerns that the Blue House is neglecting the appointment of the FSS chief.

According to the FSS on the 30th, since former FSS chief Yoon Seok-heon stepped down on the 7th of last month, Acting Senior Deputy Governor Kim Geun-ik has been in charge for 55 days as of today. This is the longest vacancy since former chiefs Choi Heung-sik and Kim Ki-sik were appointed within 20 days each.

Until early this month, it was widely expected that the FSS chief appointment would be finalized soon. However, even the speculation has now subsided. The only possibility being discussed is the promotion of Kim Geun-ik, the acting Senior Deputy Governor of the FSS.

Since the FSS chief is appointed by the President upon the recommendation of the Financial Services Commission (FSC) chairman after a resolution by the FSC, it is known that Chairman Eun Sung-soo has been scouting candidates and reporting to the Blue House, but there has been no news so far.

Some suggest that the Blue House may not have the capacity to pay attention to financial sector personnel appointments. Indeed, controversies have arisen over the personnel screening system due to allegations of real estate speculation against former Blue House anti-corruption secretary Kim Ki-pyo and the postponement of the nomination of Park In-ho as the new Air Force Chief of Staff. As problems with the Blue House and government personnel screening system have surfaced, there is speculation that the FSS chief appointment may be further delayed.

The problem is the changing financial conditions looming everywhere. With a rate hike in the second half of the year almost certain, concerns over household debt are growing. Moreover, in September, issues such as the expiration of COVID-19 financial support and the enforcement of the Act on Reporting and Using Specified Financial Transaction Information are scheduled, which could impact households and the market.

Especially, middle- and low-credit borrowers who have "Yeongkkeul" (borrowing to the limit) and "Bittu" (investing with borrowed money) could be hit hard, making proactive management and supervision by the FSS crucial at this time.

The comprehensive inspections and sanctions of banks, including Woori Financial Group and Woori Bank, expected in the first half of the year, have also been postponed. The FSS Sanctions Committee's review of Hana Bank, which sold Lime Funds, originally scheduled for the second quarter, has been deferred to next month. Compensation for foreign exchange derivatives like KIKO in the banking sector was being pursued through voluntary adjustment following the FSS Subcommittee's recommendation, but lost momentum after former chief Yoon's resignation.

Major tasks such as finalizing sanctions related to the private equity fund scandal, cryptocurrency regulation, and suitability assessments of major shareholders in financial company mergers and acquisitions (M&A) are also stalled.

With the FSS chief position vacant, there are growing concerns inside and outside the financial sector about potential disruptions at a time when prompt responses are needed. Although the FSS has stated it will continue operations under the acting system according to regulations, the chief and acting chief are distinctly different, and the absence of a leader inevitably affects operations in some way.

A financial authority official said, "As the FSS chief vacancy prolongs, internal staff fatigue is increasing and concerns are growing. It is urgently necessary to appoint an FSS chief who understands the internal situation well and has the ability to lead operations based on conviction as soon as possible."

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