Finance minister stresses solidarity, risk management
Finance Minister and Deputy Prime Minister Choi Sang-mok, who took office early this year, urged the financial sector to make their utmost efforts in risk management to mitigate rising concerns over a looming real estate project financing crisis. Choi also stressed the value of solidarity and mutual support as keys to overcome challenges posed by economic uncertainties.
His comment came at a New Year’s meeting among financial authorities and key financial industry associations at Lotte Hotel in central Seoul, Wednesday afternoon. Some five hundred distinguished guests attended the meeting, including Financial Services Commission (FSC) Chairman Kim Joo-hyun, Financial Supervisory Service (FSS) Governor Lee Bok-hyun, Bank of Korea (BOK) Governor Rhee Chang-yong, as well as leaders of the Korea Federation of Banks (KFB), the Korea Financial Investment Association (KOFIA), and heads from associations of life insurance, non-life insurance, credit finance and savings banks.
“Innovation and solidarity in the financial sector will be possible only when a thorough risk management is implemented. Regarding recent concerns surrounding real estate project financing, the government calls on financial companies to reconsider and enhance their operation and debt management practices,” Choi said during his address at the event.
“The government also urges them to make sure the management of their capital soundness, such as the increase of reserves to enhance loss-absorbing capacity and the accumulation of countercyclical capital buffers, which will be implemented starting this year,” he stressed.
While urging the financial sector to come up with innovative market models forming solid support for growth of the national economy, especially in areas of cutting-edge science and tech and venture enterprises, Choi highlighted that the government will also be supplying the largest-ever policy financial support totaling 570 trillion won ($435 billion) to shore up the financial industries’ efforts.
“For the economic system centered on the private sector and the market to be sustainable, solidarity among economic entities must function as the backbone,” the finance minister accentuated.
FSC Chairman Kim Joo-hyun, the country’s top financial regulator, echoed the finance minister’s message that “it is crucial to maintain a social solidarity to ensure vulnerable groups in the country will not collapse in financially uncertain times.”
“While striving for normalization and stabilization in areas such as real estate project financing, the soundness of the secondary financial sector and household debts, the FSC will also make efforts to promote financial services that protect people’s livelihoods, and that are financial crisis resilient, to drive future growth,” Kim said during the meeting.
BOK Governor Rhee Changyong vowed that the central bank will maintain close consultation with the government and the financial sector to achieve financial stabilization, especially in real estate project financing, to facilitate an “orderly resolution process.”
“The BOK will utilize a well-balanced policy combination based on internationally validated methods to effectively combat inflation, while maintaining equilibrium,” Rhee said.
Lee Bok-hyun, governor of the FSS, meanwhile, urged the financial industries to firmly implant the practices of “responsible management so that the trust of consumers will not disintegrate.”
“The FSS calls for the enhancement of risk response systems to sufficiently secure loss-absorbing capacity. Additionally, we urge the need to maintain substantial efforts for mutual prosperity, ensuring the continuous operation of social contribution supports,” Lee said.