[The Editors' Verdict] A 'One Team' Approach Is Urgently Needed for Financial Authorities

Put an End to Speculation Over the FSC Chairman Appointment
Time to Focus on Market Stabilization for the National Interest

Photo by Dongju Yoon doso7@

As the second Yoon Suk-yeol administration cabinet takes shape, there is rampant speculation in the industry regarding the appointment of the Financial Services Commission (FSC) chairman, the final piece of the economic team puzzle. Although there were rumors of dismissal and possible replacement, the decision has settled on retaining the current Chairman Kim Ju-hyun. The reason behind this retention is market stabilization.

Currently, the domestic market is in a state of emergency akin to wartime. There are numerous factors threatening the Korean economy, including the insolvency of real estate project financing (PF) sites, high levels of household debt, and massive losses from Hong Kong H-Index equity-linked securities (ELS).

During emergencies, leadership is not changed. This is why President Yoon Suk-yeol has firmly decided to keep Chairman Kim. It is considered the best judgment to maintain the economic and financial leadership, known as the so-called F4 (Finance 4), with minimal changes to preserve the synergy they have built.

Initially, replacing Chairman Kim was highly likely. The sole successor candidate was Son Byung-doo, chairman of the Korea Exchange. Chairman Son, a former bureaucrat, held key international finance positions at the Ministry of Strategy and Finance before joining the FSC as secretary-general of the Public Fund Management Committee in 2013. After serving in major roles such as director of the Financial Policy Bureau, standing commissioner, and vice chairman, he was appointed as the 7th chairman of the Korea Exchange on December 7, 2020. The market welcomed his return to the FSC, valuing his insight and grip on the market. The prevailing assessment was that he was the right person to carefully manage current issues and challenges. Moreover, appointing a seasoned economic bureaucrat with extensive financial policy experience as chairman could be interpreted as a move emphasizing organizational stability and risk management.

This implies that simply citing market stabilization as the reason for retaining Chairman Kim lacks persuasiveness. Various rumors circulated regarding the cancellation of Chairman Son’s move to the FSC, including opposition from key factions and the influence of conflicts between key factions and the People Power Party. Market stabilization may only be a superficial reason. Additionally, amid growing concerns over real estate PF insolvency, appointing a new chairman could be a heavy burden for the president, who holds the personnel authority. Therefore, it may have been judged that retaining Chairman Kim would maintain continuity in the soft-landing policy for real estate PF while also demonstrating accountability in case of emergencies. In other words, there was no need to pull out the replacement card now. Chairman Kim, a career bureaucrat, has been recognized for his capabilities through key roles at the Ministry of Finance (the predecessor of the Ministry of Strategy and Finance), the Financial Supervisory Commission (the predecessor of the FSC), and the FSC as standing commissioner and secretary-general.

With the market already burdened by numerous negative factors, the internal atmosphere within the financial authorities has become tense due to debates over leadership appointments. There were likely those who welcomed Chairman Son’s move to the FSC, hoping for reform and expecting him to resolve the piled-up challenges with his gentle charisma. There are also reports that the FSC, which has suffered a leadership scratch, is tightening internal discipline.

Regardless of any behind-the-scenes stories, it is now time to face the current crisis. The warning signals from the market are serious. Recently, Chairman Kim mentioned a “soft landing” and “orderly resolution” regarding real estate PF. This expresses his determination to complete the cleanup of project sites. A “one team” financial authority working for the economy, moving not for private gain but for national interest, is urgently needed.

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