The 2016 New Year’s Celebration for the Financial Community took place in Lotte Hotel’s Crystal Ballroom on Jan. 5. The event included a slew of dignitaries, led by Deputy Prime Minister and Strategy and Finance Minister Choi Kyung-hwan; Chairman Yim Jong-yong of the Financial Service Commission; Gov. Zhin Woong-seob of the Financial Supervisory Service; and Gov. Lee Ju-yeol of the Bank of Korea. Six financial associations, including the Korea Federation of Banks, the Korea Financial Investment Association, and the Korea Life Insurance Association hosted the annual event.
In his speech, Deputy Prime Minister Choi said the economic outlook for this year is dim, with economic growth slowing at home and the global economy not doing well on account of a number of factors led by the interest hike in the U.S. and stalled growth in emerging nations.
Choi said the old financial system lies beneath the economic slowdown and the disturbance of the financial market. He called for reform to break up outdated systems, which will bring suffering to those who manage it. Good reform, he explained, involves peeling off old layers so that new ones can grow.
Chairman Yim Jong-yong of the Financial Service Commission said the public demands that the financial authorities and the financial firms undertake reform. “We will always have our ears open to hear the problems of financial borrowers,” he said, “not only to financial firms.” Chairman Yim said that financial reform already planned would be carried out, singling out that the FSC will not tamper with the key matters in the financial industry such as the interest rates, fees and dividends, among others.
Gov. Zhin of the FSS emphasized the need for preemptive actions to fend off the financial problems that are looming due to global financial instability, excess household debts, and corporate restructuring, among others. He said that he will make sure the FSS listens to the financial industry to boost reform efforts around the country.
Gov. Lee Ju-yeol of the central bank of Korea said the Korean economy is facing many tough problems, including high household debt, which could pose a danger to economic growth, and the financially weak business firms that are borrowing too much money because of low interest rates. Those in the financial industry will be on the front lines this year.
Chairman Ha Yung-ku of the Korea Federation of Banks proposed a toast to welcome the New Year. Earlier, he gave a speech in which he stressed financial reform to close the annual event for the financial community in Korea.
Korea’s financial markets have been relatively calm in the face of external shocks, such as by China’s stock market plunge on Jan. 4. The Korean Kospi fell 2.2 percent on that day but recovered 0.6 percent on the following day. The Seoul government is keeping a close eye on financial market conditions in China.
Policy Response
The FSC will closely monitor foreign capital flows in Korea’s stock market, especially from advanced countries, due to the U.S. interest rate hike and possible fiscally-distressed oil-producing countries.
“We will also push ahead our policy efforts for the inclusion of Korean stock markets in MSCI advanced market index,” they said, adding that the country will ensure prompt policy amid market anxiety without causing shocks to financial markets. However, the pace of rate hikes in the United States and subsequent currency turmoil has alerted us to a rough year for global economic and financial conditions.
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