Goseungbeom-led Team Faces Challenges...Focus on Additional Household Debt Measures (Comprehensive)

DSR Strengthening Discussed... "Real Demand Will Be Considered"
Addressing Concerns Over Virtual Currency Exchange Closures Also a Key Task
Ongoing Issues Include COVID Loans and Debt Refinancing Platforms

On the 27th, Ko Seung-beom, the nominee for the Financial Services Commission Chairman, attended the confirmation hearing held at the National Assembly and responded to questions from lawmakers. Photo by Yoon Dong-ju doso7@

[Asia Economy Reporter Kim Jin-ho] It appears that Go Seung-beom, the nominee for Financial Services Commission Chairman and the third head of financial authorities under the Moon Jae-in administration, will be inaugurated on the 31st. Go's top priority is managing the household debt, which has surpassed 1,800 trillion won. Financial circles are focusing on Go Seung-beom's administration as he faces the challenging task of curbing the rapid increase in household debt while protecting genuine borrowers.

According to financial authorities and the financial sector on the 30th, President Moon Jae-in plans to soon approve the parliamentary confirmation report on Go's nomination. Following presidential approval, Go is expected to officially take office tomorrow. The outgoing chairman, Eun Sung-soo, held a farewell ceremony at the Government Seoul Office on the same day.

As Go himself pointed out, his top priority is 'household debt.' Amid an unprecedented low-interest-rate environment, household debt has increased by about 170 trillion won over the past year, breaking records daily. Public concern over the 'asset bubble' in real estate and stocks caused by the surge in household debt is higher than ever.

It is anticipated that Go will 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 for individual borrowers. He plans to expedite the schedule for the full implementation of expanded borrower-level DSR regulations, originally set for 2023. Additionally, there is a high possibility of expanding DSR regulations on secondary financial institutions, which are currently more lenient than banks. This is due to a clear 'balloon effect,' where loans are concentrated in secondary financial institutions to exploit regulatory arbitrage.

However, Go is also expected to introduce supplementary measures to ensure that genuine borrowers such as non-homeowners 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."

Concerns over the reality of mass closures of virtual currency exchanges are also an urgent issue. The grace period for registration ends on the 24th of next month, but only one exchange has met the requirements and registered. 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 and industry stakeholders, 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 strengthened social distancing, the difficulties faced by self-employed individuals and small businesses persist, making an extension inevitable. However, since the financial sector views the interest payment deferral negatively, it will be noteworthy how he plans to persuade them.

Coordination regarding the 'debt refinancing platform,' which recently became a hot issue, is also an important task for the Financial Services Commission. The platform has been stalled due to concerns over banks' dependence on big tech, but Go has expressed a position to 'reconsider from the beginning.' Accordingly, changes to the Financial Services Commission's policy, which had aimed for an October launch and had been communicating with the industry, seem inevitable.

Furthermore, discussions with the Bank of Korea to process the pending amendment to the Electronic Financial Transactions Act in the National Assembly, and preventing a recurrence of the 'eat-and-run' controversy caused by the Merge Point incident, are also tasks Go must address.

The decision on the disciplinary measures related to the private equity fund incident remains a challenge for him. Earlier, Sohn Tae-seung, Chairman of Woori Financial Group, won the first trial of the lawsuit against the Financial Supervisory Service to cancel the disciplinary action related to the overseas interest rate-linked derivative-linked fund (DLF) on the 27th. As a result, the disciplinary measures against other financial company CEOs related to private equity funds are likely to be significantly reduced. Previously, the Financial Services Commission indicated that it would decide the sanctions for other CEOs based on the court's ruling.

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