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Economy

New FSC chief nominee tough on household debt, against cryptocurrencies

Analysts expect a BOK rate hike as early as this month even with the departure of the hawkish rate-review board member

By Aug 06, 2021 (Gmt+09:00)

Koh Seung-beom, the Moon Jae-in administration's pick as new FSC chairman
Koh Seung-beom, the Moon Jae-in administration's pick as new FSC chairman

South Korea’s incoming financial regulatory chief says his policy priority is on limiting economic and financial risks stemming from higher household debt and asset price fluctuations.

Koh Seung-beom, nominated by President Moon Jae-in on Thursday to be the chairman of the Financial Services Commission (FSC), also said he is against institutionalizing cryptocurrencies as a means of transactions.

“I’ll do my best to prepare for local and external uncertainties, while putting financial risks such as rising household debt and higher asset prices under control,” he told reporters after his nomination as the new regulator chief. “Also, cryptocurrencies are not money.”

His nomination is subject to confirmation at the National Assembly.

Koh, who worked for years at the FSC, is currently a member of the Bank of Korea's monetary policy board.

He is known to be hawkish as he was the only member of the central bank’s seven-member board who voted for a rate increase at last month’s rate review, which decided to keep its policy rate at 0.5%.

Analysts said Koh’s appointment suggests the Moon administration’s favor for a tighter financial and monetary stance to tame surging property prices.

Some capital market participants expect the BOK to raise the benchmark interest rate by 0.25 percentage point to 0.75% at its Aug. 26 rate-setting meeting despite Koh’s sudden departure.

Korea’s financial authorities are burdened with the country’s snowballing household debt, fueled by ultra-low interest rates.

Korea’s total household debt increased 9.5% on year to about 1,765 trillion won ($1.56 trillion) in the first three months of this year, according to BOK data.

The FSC chief nominee is also against cryptocurrencies, saying that massive fund flows into the cryptocurrency exchanges, caused by the easy monetary policy, have contributed to asset bubbles.

His tough stance on cryptocurrencies comes as the FSC is set to crack down on virtual assets to prevent criminal activity and protect investors.

By Sept. 24, virtual asset trading bourses must be certified by the state in terms of risk management and partner with a domestic bank to ensure real-name accounts of their clients if they want to continue operations. Otherwise, they will be forced to close down their businesses.

Korean regulators are particularly concerned about young people who see virtual assets as a quick path to prosperity amid persistently high unemployment and skyrocketing home prices.

Having studied at Seoul National University to earn a bachelor’s degree in economics and a master’s degree in public administration, Koh received his doctorate in economics from American University in Washington D.C.

Write to Ho-Gi Lee and Ik-Hwan Kim at hglee@hankyung.com

In-Soo Nam edited this article.

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