[Reporter’s Notebook] Expectations for the Next Chairman of the Financial Services Commission

[Asia Economy Reporter Jin-ho Kim] Go Seung-beom, a member of the Monetary Policy Committee of the Bank of Korea, has been nominated as the next chairman of the Financial Services Commission. Since there was no mention of a possible replacement, the financial sector's reaction is that this is a "surprise appointment." It is also unusual for a current Monetary Policy Committee member to be appointed as the chairman of the Financial Services Commission. This move reflects the Moon Jae-in administration's decision to deploy a new "firefighter" to resolve financial risks at the end of its term.

The "challenges" facing nominee Go are formidable. The role of finance has become more prominent than ever amid the economic crisis caused by COVID-19.

Managing household debt, a core government task, is an urgent priority. Household debt has ballooned to 1,760 trillion won as of the end of the first quarter of this year due to unprecedented ultra-low interest rates, placing it in a state of "uncontrollable" growth. This is because the government's management of household debt over the past few years has been limited to "reactive" measures. Efforts to plug one leak have only caused another to burst, resulting in a balloon effect that was difficult to contain.

As the head of the financial authorities, nominee Go needs to send a message of "proactive and resolute measures" to the market. Strong determination from the authorities is crucial to protect the Korean economy from household debt. In particular, the possibility of a base interest rate hike in the second half of this year makes managing household debt even more urgent.

The expiration of the COVID-19 loan maturity extension and interest payment deferral, which has already been postponed twice, is also an urgent issue. Recently, the need for an additional extension has emerged due to the widespread outbreak of COVID-19 variants. The challenge lies in persuading the banking sector, which argues that this "undermines the essence of finance." To help struggling borrowers without imposing unilateral sacrifices on financial institutions, nominee Go's insight is needed at this critical time.

Another task is to mediate the power struggle between the Financial Services Commission and the Bank of Korea over the Electronic Financial Transactions Act. Since the two institutions have been at odds over this issue, there are calls for nominee Go, who has a deep understanding of both sides, to act as a "bridge."

The issue of the proliferating virtual currency exchanges is also a problem to be solved. Exchanges that fail to register by the 24th of next month will be forced to close, raising significant concerns about "consumer protection."

Nominee Go, who will play a major role in the Moon Jae-in administration's final focus on public welfare and economic recovery with about nine months left in the term, is expected to demonstrate leadership in resolving the numerous financial issues at hand.

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