[Jeongmuwi National Assembly Audit①] Household Debt and Cryptocurrency Under Scrutiny... 'Merge Incident' Also Sparks Controversy

Rapidly Increasing Household Debt and Recent Regulatory Policy Review
Concerns Over Market Closures and Confusion Ahead of Financial Services Commission and Financial Supervisory Service Audit

National Assembly / Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Seong Gi-ho] As the National Assembly's Political Affairs Committee's audit is set to begin early next month, 'household debt' and 'virtual currency' are expected to be the main points of contention. Along with this, sensitive issues such as overseas interest rate-linked derivative-linked funds (DLF), private equity fund controversies, and the Merge Point incident are piling up, indicating that there will be intensive scrutiny of the heads of financial authorities.

According to political circles on the 20th, the Political Affairs Committee recently decided in a plenary session to conduct audits from October 1, starting with the Office for Government Policy Coordination, until October 21. Audit plans for major institutions such as the Fair Trade Commission on the 5th, the Financial Services Commission on the 6th, and the Financial Supervisory Service on the 7th were also adopted.

The biggest issue in the audit targeting financial authorities is the household debt problem. Despite the government's strong drive, the scale has surged beyond 1,800 trillion won. Accordingly, ruling and opposition lawmakers are expected to continue strong questioning of the heads of financial authorities. In particular, since Go Seung-beom, the recently appointed chairman of the Financial Services Commission, emphasized that "household debt is at a manageable level," there will likely be focused scrutiny on countermeasures and forecasts regarding this issue.

Along with this, concerns about the recent loan regulations and their pace are also points of controversy. The National Assembly Legislative Research Office recently pointed out in its '2021 Audit Issue Analysis' report that the current method of regulating mortgage loans "restricts the freedom of financial companies and consumers." Therefore, questions about what side effects rapid tightening of household loans might bring are also expected to be raised.

The virtual currency issue is attracting attention as it may cause turmoil during the audit period. According to the Financial Services Commission, the deadline for virtual asset service providers to register under the Act on Reporting and Using Specified Financial Transaction Information (Special Financial Transactions Information Act) is the 24th of this month. Exchanges that fail to register must effectively cease operations, and the industry expects that at least half or more will shut down or stop operating the won market (intermediation of transactions between won, dollar, and virtual assets). Because of this, there is a forecast that the virtual currency chaos could peak and emerge as a social issue during the Financial Services Commission and Financial Supervisory Service audits on the 6th and 7th.

The Merge Point incident, which triggered a large-scale refund crisis, is also a key issue. Lawmakers point out that management and supervision of unregistered prepaid operators like Merge Point have been negligent, causing significant damage to consumers and small business owners. Additionally, Nam-hee Kwon, CEO of Merge Plus, will be summoned as a witness in relation to this. The industry anticipates that measures will be demanded to address the blind spots in financial authorities' oversight of prepaid electronic payment operators.

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