Chairman Shin Je-yoon of the Financial Services Commission will have to take care of the launching of the National Happiness Fund, one of the major items in President Park Geun-hye’s campaign pledges.

The projected fund is designed to relieve the pain of those struggling to repay household debts and interest on their loans, especially those with poor credit ratings by replacing their current high interest-rate loans with loans with manageable interest rates.

The commission was said to have told the new chairman that the 500 billion won Credit Recovery Fund managed by the Korea Asset Management Corp. could be switched to the Fund if needed and it will be used to relieve the debt of those who are about six months behind in interest payments on their household loans by buying those assets in default from the financial institutions. 

 An official of the FSC said the commission could launch the Fund in the middle of March and accept applications from debtors in the middle of April to purchase their assets in default. 

The Fund will be designed to take care of 50 percent of bad assets or as much as 70 percent of the debts that the financially poor borrowers have trouble repaying. Chairman-designate Shin is fully aware of the problems in the way of the success of the projected Fund and said he will try to reduce the level of moral hazards as much as possible. He said the 100 billion won in household debts will be reduced gradually as promised in President Park’s campaign pledges and it will require patience because household debts are different from corporate debts, and can take a long time to resolve.

Among the problems he will inherit include the privatization of Woori Financial Group and KDB Financial Group and the reform of policy loan banks such as the Korea Export and Import Bank and the Korea Trade Insurance Corp., which need to be addressed aggressively from the early stages of the new government.

The chairman-designate has to solve the problems from the complex ownership of those government-policy financial institutions. The majority share owner of the Korea Exim Bank is the Ministry of Strategy and Finance; the FSC holds a majority share of the Korea Finance Corp.; and the Ministry of Knowledge Economy owns the biggest share of the Korea Trade Insurance Corp., which need to be cleared up to prevent confusion and improve efficiency.

Given Shin’s experience as the first vice minister of the Ministry of Strategy and Finance, he should be able to come up with solution for the issues related to government-owned financial institutions, such as combining their ownership to make them financially strong and better able to back up private firms that need financial assistance in order to achieve their aims and grow stronger, helping the national economy in the process.

Shin’s diverse experience in international finance while with the MOSF includes his key role in putting together a $30 billion swap fund deal with the United States in 2008 soon after the Lehman Brothers fiasco, helping Korea tide over the global financial crisis.

During the Roh Moo-hyun government, Shin participated in the government team in negotiating a free trade deal with the United States. Under the Lee Myung-bak government, Shin lead the vice finance ministers during the G-20 Seoul Summit in 2010, playing a leading role in putting together an official communique? for the important international meeting. He also made a huge contribution to boosting Korea’s sovereign credit ratings and bringing the secretariat of the Global Climate Fund to Korea as the first vice MOSF minister in 2012.