Kim So-young, Vice Chairman of the Financial Services Commission, "Proactive Funding Support to Prevent Financial Company Insolvency"

Kim So-young, Vice Chairman of the Financial Services Commission, discussed strengthening the emergency response inspection system and checking risk factors in the financial sector with executives from related organizations such as the Financial Supervisory Service and the Korea Deposit Insurance Corporation at the 2nd Financial Risk Response Task Force meeting held on the afternoon of the 23rd at the Seoul Government Complex.

[Asia Economy Reporter Song Hwajeong] Financial authorities are pushing for related institutional improvements to enable proactive financial support to prevent the risk of insolvency among financial companies amid increased volatility in the financial market.

On the 23rd, Kim Soyoung, Vice Chairman of the Financial Services Commission, held the 2nd joint Financial Risk Response Task Force (TF) meeting with related organizations and announced this plan.

In her opening remarks, Vice Chairman Kim evaluated that "global financial market volatility is increasing and concerns about an economic recession are also rising," adding, "Accordingly, we have strengthened the emergency response inspection system by expanding and reorganizing the Financial Risk Inspection Meeting into the Financial Risk Response TF, and we will focus on inspecting the 10 key financial risk response tasks."

She continued, "We will implement the financial sector livelihood support program reflected in this supplementary budget as early as possible and form and operate a Financial Difficulty TF for vulnerable groups to alleviate additional difficulties, preparing and considering specific support measures in advance."

At the meeting, it was decided to promote related institutional improvements to enable proactive financial support to prevent insolvency risks in financial companies. Accordingly, the current role of the Korea Deposit Insurance Corporation, which handles the resolution of insolvent financial companies, will be supplemented to allow support for preventing insolvency and crisis contagion among financial companies. Additionally, to prepare for situations such as corporate funding difficulties due to contraction in the corporate bond market, the operation status of existing corporate support programs will be reviewed, and plans to expand support will also be considered.

Regarding risk factors and the liquidity and soundness status of the financial sector, Vice Chairman Kim emphasized, "Since credit finance companies have a high dependence on funding through credit finance bonds, liquidity risks recur during crises, so it is necessary to devise management measures for excessive leverage of credit finance companies," adding, "Alongside financial sector regulatory innovation, it is also necessary to systematically reorganize liquidity regulations for the secondary financial sector." She also urged a review of the issue recently raised about savings banks circumventing household loan regulations through business loans.

The newly expanded and reorganized Financial Risk Response TF consists of the Financial Services Commission, Financial Supervisory Service, Korea Deposit Insurance Corporation, related organizations, and private experts, and will operate regularly once a month. It is divided into the Financial Market Division, Financial Industry Division, and Real Economy Division, each of which pre-inspects risk factors and response measures, submits agenda items to regular meetings, and discusses them. Additionally, private expert meetings will be held separately and as needed.

The Financial Risk Response TF plans to hold its next meeting around the 21st of next month to discuss the re-evaluation of the effectiveness of market stabilization measures taken so far, supplementary measures, and specific implementation plans for institutional improvements for proactive financial support to financial companies.

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