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Financial Supervisory Service governor Jeong Eun-bo

Incoming Financial Supervisory Service (FSS) chief Jeong Eun-bo warned Friday about the possibility of a “perfect storm” of risks striking financial markets all at once.

“While financial support is desperately needed for recovery in the real economy, we are facing tough financial conditions in which excessive debt in the private sector has to be managed,” Jeong said. “We could face a ‘perfect storm’ in which a host of different risks all strike at once, including the possibility of more insolvencies among marginal enterprises and the self-employed and adjustments in the prices of assets subject to concerns about a bubble.”

Jeong also touched on other aspects of the situation confronting the FSS, including reduced trust in financial markets and blame directed at financial authorities over the private equity fund debacle, the platformization of finance, and expansion and changes in finance, including virtual assets.

Jeong made three requests of FSS staff, starting from active communication with financial markets.

“In order for financial oversight based on laws and principles to resonate, we must have sufficient understanding of difficulties and trends in the industry itself,” he said. “It is imperative that we listen to consumers and the industry through continuous communication with the market, and actively seek to incorporate the advice of experts in many fields.”

Second, Jeong called for “instilling the idea that the duty of financial oversight is support rather than regulation.” “As suppliers of ‘financial oversight services’ to the private sector, we must focus on prevention as well as after-the-fact corrections,” he said.

Finally, the FSS head said, “positive administration” is needed for the sake of protecting consumers.

In terms of the future objectives of financial oversight, Jeong repeated the three points he had raised in his acceptance speech the previous day, namely financial supervision based on laws and principles, a balance between preemptive supervision and after-the-fact oversight and protecting financial consumers.

Jeong finished by quoting the four-character idiom gunjabulgi (a wise man should not be a bowl with a single use) from the Analects of Confucius to stress the importance of flexibility in financial oversight.

“A wise man is someone who, unlike a bowl of fixed shape, is able to adjust and flexibly handle matters in every discipline,” he said. “We must abide by laws and principles, but I believe this is a virtue worth referring to so that we remain in step with the market and avoid becoming rigid in the provision of supervisory services.”

By Park Hyun, staff reporter

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