Eun Sung-soo "Successful Response to COVID-19... Future Task is Orderly Normalization"

Published 06 Jul.2021 14:00(KST)

Keynote Speech at the 'COVID-19 Response Financial Policy Evaluation Symposium'

Eun Sung-soo, Chairman of the Financial Services Commission, is attending the 25th Real Estate Market Inspection Meeting of Related Ministers held at the Government Seoul Office in Jongno-gu, Seoul on the 30th. Photo by Kim Hyun-min kimhyun81@

[Asia Economy Reporter Jin-ho Kim] Eun Sung-soo, Chairman of the Financial Services Commission, on the 6th, self-assessed the financial authorities' COVID-19 response policies as 'successful.' He also emphasized 'orderly normalization' as the policy direction after COVID-19. However, citing the possibility of the start of global tightening, he issued a warning message urging households and companies to check their financial soundness.

Chairman Eun attended the 'Symposium on Evaluation of Financial Policies Responding to COVID-19' held at the Bankers' Hall in Jung-gu, Seoul, and said, "Through bold and comprehensive financial policy responses, our economy minimized the extent of negative growth."

He first emphasized, "In policy formulation during crises, we have maintained the principle that measures must be bold enough to block transmission and ripple effects and to overwhelm anxiety with scale and intensity," adding, "Stabilizing the stock and capital markets and supporting small business owners were prioritized."

He continued, "We built an unprecedentedly large firewall of 175 trillion won plus @ to quell the widespread fear and anxiety in the market."

According to the Financial Services Commission, thanks to bold and comprehensive policy responses, the financial system stabilized quickly despite difficult circumstances. It also judged that self-employed individuals and small and medium-sized enterprises overcame liquidity crunches, and that chain bankruptcies or large-scale employment instability were not triggered in key industries.

Chairman Eun said, "The fact that capital expansion funds prepared for a financial system crisis were not activated shows that the crisis response was effective," and added, "The International Monetary Fund (IMF) also evaluated that our bold policy response contributed to mitigating the COVID shock."

However, Chairman Eun also urged caution regarding the possibility of 'aftershocks' following the COVID-19 crisis. He diagnosed, "The rapidly increased private debt and soaring asset prices during the crisis response process, combined with global tightening, could cause another shock," and "We must also look into difficulties in vulnerable sectors hidden behind average indicators."

He then said, "It is necessary for the private sector itself to make efforts to normalize excessive debt and risk-seeking behavior," and urged, "Especially, even if interest rates rise, please check financial soundness to ensure there is no problem with repayment ability."

Regarding the direction of financial policy operation after COVID-19, he announced 'orderly normalization.' Chairman Eun said, "We will closely monitor indicators such as quarantine and financial conditions to ensure that there is no damage whatsoever to financial stability, including excessive debt," and "We will manage the stable control of household debt growth and prepare for the possibility of interest rate increases."

He also emphasized the role of 'financial services taking a step further' in orderly normalization. To this end, he stated plans to promote ▲ investment in next-generation new industries such as digital, Green New Deal, and green finance ▲ strengthening the inclusive financial stance ▲ enhancing financial dynamism and driving economic vitality.

In particular, he promised even stronger support for vulnerable sectors with slower recovery speeds. He said, "The small business financial support program will operate until the livelihood-sensitive economy improves," and "We will devise detailed support measures such as loan maturity extensions and interest repayment deferrals for self-employed individuals and small and medium-sized enterprises directly hit by COVID-19."