Kim Byung-hwan "Preventing Political Vacuum Until Presidential Election... Differentiated 3-Stage DSR for Capital and Provinces"

Kim Byung-hwan Financial Services Commission Chairman Press Conference

"All Efforts for Market Stabilization"

Stress DSR, Deposit Limit, MG Insurance Handling Policy by May

Ahead of the presidential election in June, Kim Byung-hwan, Chairman of the Financial Services Commission, reaffirmed the policy to prevent a political vacuum and stabilize the market. Regarding major policy issues such as the stress Debt Service Ratio (DSR), raising the deposit protection limit, and handling MG Insurance, Chairman Kim stated, "We will conclude them within this month."

Chairman Kim held a monthly press conference at the Government Complex Seoul on the 7th, providing additional explanations on current issues and sharing the main tasks of the authorities going forward. He said, "Despite several changes, such as the resignation of former Deputy Prime Minister and Minister of Strategy and Finance Choi Sang-mok, we will manage the tasks that need to be done in terms of financial policy until the presidential election," adding, "The most important thing is market stability. We will check the market daily, centering on the Macroeconomic and Financial Issues Meeting (F4)."

Stress DSR, Deposit Limit, MG Insurance Handling... "Within This Month"

First, the Financial Services Commission announced that it would announce detailed plans related to the introduction of the 3-stage stress DSR within this month. In particular, the capital and provinces will proceed with slight differences. The stress DSR is a system that reflects future interest rate fluctuation risks, imposes an additional interest rate (stress rate) on loan interest rates, and calculates loan limits.

Chairman Kim said, "There are various political schedules, but there are things that the financial authorities inevitably have to release within this month. A representative example is the position related to the stress DSR," adding, "The introduction of the 3-stage stress DSR is scheduled for July 1, and the consistency of policy in the household loan sector is very important, so we will release the implementation plan within this month as previously announced." He further explained, "While detailed matters need to be coordinated, we are basically proceeding with the perspective that there will be slight differences between the provinces and the capital, and we are coordinating the interest rate levels, etc."

The timing of raising the deposit protection limit was also specified. The authorities need to specifically designate the implementation timing of the Deposit Protection Act, which raises this limit from 50 million won to 100 million won.

Chairman Kim said, "We are consulting with related agencies with the goal of implementing it on September 1." He added, "As a result of discussions in the task force (TF) with related agencies several times, there was a consensus that the end of the year and the beginning of the year should be avoided as it is a period when funds can move, and considering that financial companies need time to prepare internally, we took that into account."

The handling plan for MG Insurance, whose sale has been repeatedly canceled, is also planned to be expedited. He said, "We plan to release the handling plan within this month if it is coordinated after reviewing the protection of policyholders, financial market stability, and the feasibility of various alternatives," adding, "We will release it flexibly in May or June, depending on the situation."

Meanwhile, regarding the approval of Woori Financial to incorporate an insurance company as a subsidiary, there was criticism that "the Financial Services Commission exercised its discretionary power too broadly." In response, Chairman Kim said, "Originally, approval is a discretionary act. However, I think the criteria should be transparent. We judged and interpreted it after sufficient review by the Financial Services Commission subcommittee and the Financial Services Commission," adding, "We will consistently apply that interpretation when granting approval in the future."

Government Meetings Full of 'Acting'... "Finance Must Be Stable"

Amid various financial authority organizational restructuring plans being discussed, mainly by the opposition, Chairman Kim stated, "Policy coordination and fine-tuning are more desirable."

When asked about his thoughts on the Democratic Party's discussion of transferring the policy function of the Financial Services Commission to the Ministry of Strategy and Finance and creating a 'Financial Supervisory Commission' (Financial Supervisory Commission), he replied, "Since the financial supervisory system was changed after the foreign exchange crisis, functions have been reorganized little by little, both large and small. At the time of reorganization, the intention was 'Let's reorganize in this direction because of this problem,' but after the reorganization, shortcomings were seen again, so reorganization was repeated."

He said, "From this perspective, of course, the structural issues of any organization should be considered, but I think it is more important to finely adjust how to operate well between institutions," adding, "It seems desirable to coordinate (functions that seem lacking) a little bit with each other."

In addition, Chairman Kim also expressed his opinion on the evaluation of discord with Lee Bok-hyun, head of the Financial Supervisory Service.

When asked if there was a reason for showing caution as the Financial Services Commission Chairman when Director Lee's remarks became a topic in the market, he said, "From organization (Financial Services Commission) to organization (Financial Supervisory Service), I think the two institutions cooperated well. However, in terms of the relationship between the heads of institutions, I also had a lot to say. But (politically) in this period, many ministries and institutions are in an acting system. In this situation, I had a strong thought about whether the financial authorities should also contribute," he said. He added, "If it was accepted that I (responded with silence and exacerbated the problem), I will accept it as an evaluation that my leadership was lacking as the head of the institution and in the relationship between the heads of institutions."

When asked about his thoughts ahead of the presidential election, Chairman Kim said, "The situation is very difficult. Even the Deputy Prime Minister of Economy has resigned, and when you attend government meetings, including the Cabinet meeting, there are a lot of acting positions." He continued, "As the presidential election approaches, uncertainty will increase, but the financial market opens every day. It trades every day and invests every day. The daily lives of ordinary people repeat regardless of the political schedule," adding, "Therefore, I and the Financial Services Commission will do our best to provide a sense of stability."

Shin Min-kyung, Hankyung.com reporter radio@hankyung.com