KB News Desk
Young finance chiefs’ collaboration raises both concerns and expectations
By Jun Ji-hye
Kim Byoung-hwan was officially appointed by President Yoon Suk Yeol as the chief of the Financial Services Commission (FSC), Wednesday, becoming the youngest leader of the country’s top financial regulator.
Born in 1971, the new FSC leader faces a daunting array of tasks, including tackling the persistent growth of household debt and addressing increasing delinquencies in the real estate project financing sector.
Another crucial task awaiting him is establishing relations with Lee Bok-hyun, the governor of the Financial Supervisory Service (FSS), the country’s financial watchdog.
The FSS, in principle, operates as a subordinate agency under the direction and supervision of the FSC.
Concerns over the relationship between the two agencies were addressed as a critical issue during Kim’s confirmation hearing on July 22. Lee’s controversial remarks on various pending issues, criticized for exceeding the FSS’ mandate, underscored the importance of clarifying their roles and responsibilities.
“In Korea, the FSC oversees the overall financial policy, while the FSS is responsible for monitoring and supervising financial institutions,” Rep. Yoo Yeong-ha of the ruling People Power Party said.
“Additionally, the FSC is tasked with guiding and overseeing the operational management of the FSS. Recently, however, there has been some discord between the two agencies.”
Yoo cited Lee’s past remarks that called for a reassessment of the proposed introduction of the financial investment income tax. He questioned the appropriateness of the FSS head making statements that could be interpreted as influencing policy direction.
“The FSS is not a financial policymaking body, but a supervisory authority for financial institutions,” Yoo said, claiming that Lee’s comments “exceeding his authority” have caused confusion in the market.
Rep. Han Chang-min of the minor opposition Social Democratic Party of Korea also highlighted Lee’s remarks from June, where he advocated for the partial resumption of short selling.
“It is inappropriate for the FSS governor to mention policies concerning the economy and finance,” Han said.
Financial Supervisory Service Governor Lee Bok-hyun, right, attends a National Assembly hearing on TMON and WeMakePrice’s liquidity crisis in Seoul, Tuesday. Yonhap
Born in 1972, Lee is a former prosecutor specializing in securities and finance investigations, noted for being one of the closest aides to the prosecutor-turned-president.
Despite these considerations, financial industry officials have voiced concerns over Lee’s controversial remarks. They point out that it remains uncertain whether Kim, who is younger and less experienced compared to the outgoing FSC head, can effectively manage Lee.
But others cautiously anticipate that Kim and Lee could collaborate effectively, noting their shared background as young leaders in the financial sector and alumni from the Department of Economics at Seoul National University.
On July 5, Lee visited Kim while he was preparing for his confirmation hearing, to discuss pending issues. Observers viewed this visit as an opportunity to showcase their friendship.
Regarding concerns and expectations, Kim said during the Assembly confirmation hearing, “I will collaborate effectively with Lee.”
In his inaugural address, Kim said, “I will speed up efforts to tackle four risks faced by the country’s finance.”
The four risks he cited are the growth of household loans, mounting debts held by small and medium-sized businesses, increasing risks stemming from rising delinquencies in the real estate project financing sector and concerns over the soundness of the secondary financial sector.
