Present situation in the financial market and Tasks to be solved
2012/05/29 Leave a comment
On May 9th, a political forum arranged by the National Strategy Institute (NSI) was held in the bank association hall. Concerning the present situation in the financial market and tasks to be solved, Kim Seok-dong, the Financial Services Commission (FSC) chairman gave a speech.
First, he pointed out the household debt which is one of the main issues in these days. Due to the high floating rate and a great deal of the loan, its structure is inevitably fragile. Worse, the increase rate of the debt to the nonmonetary institutions is higher than that of the bank debt. In addition, he suggested how serious the low fertility and the population aging are. In fact, they can cause decrease of the asset value and increase of the fiscal spending. Eventually, general economic activities and the national economic growth could be worsened. Moreover, according to him, the Korean financial industry has a low global competitiveness. Indeed, the asset size of the domestic financial industry only accounts for a tenth of that of the global TOP5 banks. This reveals that the financial industry has failed to reach the international standard, no matter how prosperous the real economy is.
To handle those problems, the Korean government has put much effort to come up with appropriate solutions. As its first step, the chairman Kim suggested a paradigm shift in the financial market so that the industries become more socially responsible. In fact, transforming the market into consumer-centered is the main goal for the government and hence, the attempt to develop the financial industry and protect financial consumers at the same time will be continued. In particular, to resolve the household debt, concrete and effective measures are suggested: the management of the market liquidity or the reinforcement of the petty loans. Furthermore, the government will not ease the loans to nonmonetary institutions. He also underlined that the restructuring of saving banks, one of the hottest issues in these days, is almost finished. Other than that, shrinking size of the call-money and the management of the stock risk are to be valid measures to prevent the bubble. Even he proposed to reform the current capital system. To achieve it, the government will encourage domestic investment banks and promote Korean hedge fund. In this process, the disposal of the Woori financial holdings will be necessary since it is a partly related to the public fund collection.
From the chairman’s address, it can be inferred that the Korean government is sincerely working hard to remove the obstacles blocking further development of the financial situation. Therefore, positive aftereffects are expected.
Sujin Yoo (firstname.lastname@example.org)