Lee Bok-hyun, Financial Supervisory Service Chief, "Execute All Supervisory Tasks Rationally and Transparently"

[Asia Economy Reporter Song Hwajeong] Lee Bokhyun, Governor of the Financial Supervisory Service (FSS), announced that all supervisory tasks will be carried out rationally and transparently. He also stated that the approach will be multi-dimensional and sophisticated, managing risks behind the scenes to alleviate market anxiety.

On the 15th, Governor Lee made these remarks at a press conference marking his 100th day in office, held at the Financial Supervisory Service in Yeouido, Seoul.

In his opening remarks, Governor Lee said, "Given the current economic and financial market uncertainties are higher than ever, the FSS aims to manage risks behind the scenes while approaching the situation in a multi-dimensional and sophisticated manner to ease market anxiety."

To this end, the FSS plans to proactively and cooperatively respond to domestic and international risk factors to maintain financial market stability, while intensifying efforts to protect financial consumers so that finance can regain trust during difficult times, and supporting sustainable innovation in the financial industry.

Governor Lee emphasized, "All supervisory tasks will be executed transparently according to rational procedures," adding, "To enhance the acceptance and trust of supervised institutions regarding supervisory tasks, we will strengthen the rationality of supervisory procedures both before and after the process and continuously work on improving supervisory practices."

Regarding the extension and repayment deferral measures for small business loans expiring at the end of this month, Governor Lee said, "While financial institutions should allocate resources efficiently based on autonomous decision-making, the current situation is one where raw material prices are rising sharply and the U.S. is rapidly raising interest rates, causing market upheaval. The impact inevitably falls on households and small and medium-sized enterprises." He added, "The authorities believe that policy efforts are necessary to help endure these difficult times, but specific opinions on how to proceed are still being coordinated." Governor Lee also stated, "What is certain is that the extension will not be done uniformly with the same terms," and "If extensions occur, we will explain to the relevant sectors as much as possible, listen carefully to any issues, and reflect them in policy."

Regarding the recently implemented disclosure of the interest rate spread between deposits and loans, Governor Lee stressed the need for improvements. He said, "We have been deeply concerned about properly disclosing the interest rate spread, but it is hard to say it is perfect." He added, "Core information must be easily understood at a glance to have value as information, so we continue to consider this." On fee disclosures, he explained, "We cannot do much about unique corporate costs, know-how, or trade secrets," but "disclosures can increase the data available for decision-making and create a competitive environment." He continued, "Similarly, for the interest rate spread and the right to request interest rate reductions, the world is four-dimensional, but if the disclosed or shared information remains one- or two-dimensional, it cannot properly reflect reality and will inevitably cause distortions." He added, "We are considering how to deliver information in ways that minimize distortion as much as possible."

Regarding the short-selling investigation, he said, "We have reviewed uncovered short sales at the exchange for about a month and a half, and procedures to hold parties accountable for uncovered short sales will continue," adding, "Other investigations concern unfair trading, and various possibilities remain open." He further stated, "Rather than shutting down the short-selling system itself, if individual investors are given equal opportunities to short sell when prices fall easily, misunderstandings about the short-selling system can be resolved."

On the issue of abnormal foreign exchange transactions, Governor Lee expressed that banks cannot avoid responsibility. He said, "The scale may be larger than expected, and new facts regarding roles may emerge depending on the amount. We plan to share interim inspection results at an appropriate stage," adding, "Banks cannot claim no responsibility when they themselves have not yet confirmed why this happened." He continued, "If banks claim no responsibility because they acted independently at the front line, a detailed explanation of why they are not responsible is necessary."

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