South Korea’s top two financial regulators are set to go through leadership changes simultaneously, with longstanding bureaucrats being assigned to lead them Thursday.
In an apparent attempt to win back public trust on dealing with economic woes before his term ends in May 2022, President Moon Jae-in tapped Koh Seung-beom, one of the Bank of Korea’s seven-member monetary policy board and a former Finance Ministry official, to lead the Financial Services Commission.
Current FSC Chairman Eun Sung-soo’s resignation was announced Thursday, with Cheong Wa Dae hinting that the incumbent chief desired to take a break after decades of public service.
Since becoming a public official in 1986, Koh, 59, has climbed his way to the top within the FSC before becoming a policy board member at the central bank in 2016. He participated in the FSC’s past attempts to quell household debt risks, Cheong Wa Dae said, expressing hope that he would “smoothly deal with COVID-19 financial programs, household debt and customer protection.”
Cheong Wa Dae’s announcement was followed by Koh’s statement that his key task was to “focus on the economic recovery from the COVID woes and implementing existing projects.”
Koh graduated with a bachelors’ degree in economics and a master’s degree in public administration from Seoul National University. He later received a Ph.D. in economics from American University in Washington D.C.
In the latest rate-setting meeting held last month, Koh made the most hawkish comments among the seven members, saying that the BOK should raise its current record-low benchmark rate of 0.5 percent by 25 basis points, according to minutes from the meeting. JP Morgan on Wednesday forecast that the BOK could carry out a rate hike as early as the upcoming rate-setting meeting scheduled Aug. 26.
As for his last task, the FSC’s incumbent chief Eun recommended Jeong Eun-bo, the nation’s chief negotiator for defense cost-sharing talks with the US, as the new head of the Financial Supervisory Service. Eun’s recommendation is subject to Moon’s approval.
The FSS, an organization under supervision of FSC that polices the financial markets, has faced a leadership vacuum since May after Gov. Yoon Suk-heun stepped down at the end of his term.
Jeong, 60, graduated with a bachelors’ degree in business from Seoul National Univesity and later received a Ph.D. in economics from The Ohio State University.
Kicking off his career as a civil servant the same year as Koh, he built his career in the FSC and the Finance Ministry, where later became assistant vice minister.
Financial authorities have been burdened with the heavy task of resolving the nation’s snowballing household debt, fueled by ultra-low interest rates and the COVID-19 pandemic.
South Korea’s total household debt gained 9.5 percent on-year to some 1,765 trillion won ($1.56 trillion) in the first three months of this year, BOK data showed.
Onlookers say that the nominations of long-serving bureaucrats and Koh’s remarks reflect Moon’s plan to contain the situation until the end of his term, rather than carrying out an overhaul or reform.
A key task for Koh and Jeong, besides putting the brakes on household debt, would be restoring the image of the financial authorities among the public.
Eun drew the ire of local cryptocurrency investors in April when he lectured “young investors” that they were walking “on the wrong path” by investing in digital currencies with no “intrinsic value.” The remark was made at a National Assembly meeting.
On top of it, the FSC and the FSS have been locking horns with commercial banks in recent years, shifting complete blame of misselling financial products onto them.
Critics say that the authorities should take more responsibility for their failure to monitor and prevent such misselling, which led to heavy losses for retail investors.
By Jung Min-kyung (firstname.lastname@example.org