The financial authorities urged the heads of various financial sector associations to expand the supply of "productive finance" such as advanced industries and venture investments. This meeting was convened following President Lee Jae-myung's remarks about "easy interest play."
On the 28th, Deputy Chairman Kwon Dae-young held a meeting with the heads of the Korea Bankers Association, Korea Financial Investment Association, Life Insurance Association, General Insurance Association of Korea, and the Korea Federation of Savings Banks to discuss cooperation related to the transition to "productive finance."
Deputy Chairman Kwon noted, "Criticism from the public has persisted that the financial sector has relied on real estate finance and collateral loans, clinging to easy interest-making activities," and he emphasized, "Finance must redirect the flow of market funds to productive sectors such as artificial intelligence (AI), advanced future industries, venture companies, capital markets, and local small businesses to support sustainable economic growth."
He added, "The government will comprehensively review and boldly change laws, systems, regulations, accounting, and supervisory practices that hinder financial companies from actively engaging in productive investments," and "we will swiftly improve overall sector-specific regulations, including soundness regulations such as inappropriate risk weightings according to current conditions."
The Financial Services Commission stated that it will improve financial regulations, such as adjusting risk-weighted assets (RWA) for loans, to allow financial institutions to engage more actively in corporate credit and venture investments. A task force (TF) will be formed with the Financial Supervisory Service, financial sector representatives, market participants, corporations, and experts to select and promote innovative tasks for the transition to productive finance.
This meeting was set up in response to President Lee's remarks to gather opinions from the financial sector. On the 24th, President Lee stated at a chief secretaries' meeting, "I hope financial companies will not cling to easy home mortgage loans like "interest games" but will also pay attention to expanding investments."
Heads of financial associations explained that they agreed to actively cooperate in creating a joint public-private fund of 100 trillion won for future investments in advanced, venture, and innovative companies. They noted plans to expand financial support for small businesses struggling due to the livelihood economy crisis and to establish and utilize a credit evaluation system for small businesses to alleviate financial difficulties.
The banking sector acknowledged the critical views regarding the interest margin (the difference between deposit and loan rates) and real estate-centered operations, stating that it will depart from past business practices and expand productive funding. The financial investment sector has said it will strengthen corporate finance by selecting good corporations to supply venture capital, while the insurance sector indicated plans to enhance capital soundness and increase productive domestic long-term investments.