The country’s top financial regulator unveiled the direction for financial policies for the next five years during an economic policy forum held in central Seoul on Thursday.
The revival of failed-but-restarting enterprises, pro-customer financial inclusion and a sound financial system are the new administration’s three major polivy priorities, said Ko Seung-bum, head of the financial policy department at the Financial Services Commission.
In his presentation at the forum “Hear from the New Government: Policies and Reforms Over the Next 5 Years,” Ko underscored timely and careful stimulus policies to shield the nation from the still-ongoing global economic slowdown.
Among the three essentials, the revival of failed businesses is one of the key parts of economic democratization. The new administration hopes to revitalize enterprises that have gone out of business but wish to get back on their feet again.
 |
Participants listen to the government’s financial road map. (Kim Myung-sub/The Korea Herald) |
For the revival stimulus, the state plans to offer incentives such as a crowd-funding system, broader exemptions for joint liability on guarantee and stronger technology evaluation system.
The stimulus also includes the creation of the KONEX, or a stock market exclusively created for small and medium enterprises.
“The attraction of larger venture capital to the merger and acquire market and the credit recovery of victims of joint liability on guarantee during the foreign exchange crisis in 1997 are also part of the road map,” he said.
The other two stimulus factors ― pro-customer financial inclusion and sound financial system ― involve engineering a soft landing for household debt, legislation of financial consumer protection acts, and further prevention of failure in electronic financial transactions.
To tackle the increasing household debt issue, the government is to implement pre-application for reverse mortgage and mortgage loan scheduling programs.
The country saw a significant rise in the proportion of fixed rate loans, which shot up from 11.7 percent to 44.4 percent between January 2011 and December 2012.
Ko noted that Korea was not the only country in search of financial remedies.
“As advanced economies are faced with the economic slowdown, currency disputes and other conflicts may arise among countries in the process of implementing economic stimulus packages,” he said.
But he warned against the possible side effects of hasty policies.
“Exchange rate policies can stimulate an economy without risking fiscal burden or needing domestic demand recovery, but they have limited effects when used in competition with other countries,” he said.
“I think expanding financial support for the convergence of technology and industry is essential in (Korea’s) economic stimulus.”
By Chung Joo-won (
joowonc@heraldcorp.com)
