Financial Services Commission under Ko Seung-beom, 'Household Debt' Top Priority... Will Additional Measures Emerge?

Focus on Household Debt Management and Protection Measures for Real Borrowers
Addressing Concerns Over Mass Closures of Cryptocurrency Exchanges Also a Key Issue
Ongoing Challenges Include COVID-19 Loans and Debt Refinancing Platforms

Ko Seung-beom, the nominee for the Financial Services Commission chairman, is attending the confirmation hearing held at the National Assembly on the 27th and taking the oath as a witness. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Jin-ho Kim] Go Seung-beom, the nominee for Financial Services Commission (FSC) Chairman and the third head of financial authorities under the Moon Jae-in administration, is expected to take office as early as the 30th. Go's top priority is managing the household debt, which has surpassed 1,800 trillion won. The financial sector is closely watching Go Seung-beom's administration as he faces the difficult task of curbing the rapid increase in household debt while protecting genuine borrowers.

According to financial authorities and the financial sector, President Moon Jae-in will soon approve the parliamentary confirmation report on Go's nomination. Depending on when the presidential approval is granted, Go is expected to officially assume office as early as this afternoon or by tomorrow at the latest.

As Go himself has identified, his foremost task is household debt. Amid an unprecedented low-interest-rate environment, household debt has increased by about 170 trillion won over the past year, continuously hitting record highs. Public concern over the 'asset bubble' in real estate and stocks caused by the surge in household debt is higher than ever.

Go is expected to announce additional measures to manage household debt immediately upon taking office. During the confirmation hearing, he stated that he would mobilize all available policy capabilities to manage household debt, strongly implying that existing measures alone are insufficient.

In particular, Go mentioned strengthening the Debt Service Ratio (DSR) regulations on a per-borrower basis. He plans to expedite the schedule for the full implementation of expanded DSR regulations, originally set for 2023. Additionally, there is a high possibility of expanding DSR regulations on the secondary financial sector, which currently has looser rules compared to banks. This is due to the clear 'balloon effect,' where loans are concentrated in the secondary financial sector by exploiting regulatory arbitrage.

However, Go is also expected to introduce supplementary measures to ensure that genuine borrowers, such as those without homes, are not adversely affected. In response to criticism during the hearing that the total loan volume regulation, which includes jeonse (key money deposit) and credit loans, harms genuine borrowers, he replied, "I will carefully consider measures to prevent difficulties."

Another urgent issue is the concern over the mass closure of virtual currency exchanges. The grace period for registration ends on the 24th of next month, but only one exchange has met the registration requirements so far. Go maintains a conservative stance that there will be no extension of the registration deadline to minimize consumer damage. However, it is reported that after taking office, he will seek solutions through meetings with political circles and the industry, drawing attention to whether his stance will change.

Go also mentioned the possibility of extending the COVID-19 loan maturity extension and interest payment deferral measures, which are set to expire at the end of next month. He believes that due to the continued difficulties faced by self-employed individuals and small businesses amid strengthened social distancing, an extension is inevitable. However, since the financial sector holds a negative view of the interest payment deferral, it will be noteworthy to see how he persuades stakeholders.

Coordination over the 'debt refinancing platform,' which recently became a hot issue, is also an important task for the FSC. The project had stalled due to concerns from banks about dependence on big tech companies, but Go has expressed a position to 'reconsider from scratch.' Accordingly, changes to the FSC's policy, which initially aimed for an October launch and involved communication among financial sectors, seem inevitable.

Furthermore, Go is expected to address other challenges such as discussions with the Bank of Korea regarding the amendment of the Electronic Financial Transactions Act pending in the National Assembly, and preventing the recurrence of incidents like the Merge Point scandal, which sparked controversy over 'eat-and-run' behavior.

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