The nominee for the Financial Services Commission, Lee Eok-yeon, on the 31st commented on the '6.27 loan regulation' that limits the mortgage loan cap to 600 million won, saying it is 'very effective in the short term,' and added, 'We will carefully observe trends in the housing market and household loans, and implement prepared measures immediately if necessary.'
The Financial Services Commission is reviewing additional regulations such as strengthening the loan-to-value ratio (LTV) in regulated areas (Gangnam, Seocho, Songpa, and Yongsan in Seoul) and enhancing the debt service ratio (DSR) for jeonse loans. Financial industry officials have projected that the financial authorities could lower the LTV for non-homeowners from the current 'maximum 50% in regulated areas' to 40%.
The nominee replied to a question regarding the evaluation of the '6.27 real estate measures' during a written response submitted to the National Assembly, saying, 'In the situation where the increase in household debt was expanding mainly due to mortgage loans in the metropolitan area, many evaluations indicate that the 6.27 measures are effective in the short term.'
Regarding the additional strengthening of LTV, he said, 'The impacts on household debt management and the housing market must be considered comprehensively.' Concerning the strengthening of regulations on jeonse loans, he noted, 'There are concerns that jeonse loans not only expand household debt but also support the rise in jeonse prices, which could create opportunities for gap investment,' adding, 'Since there are positive aspects to supporting housing stability for relatively cash-strapped lower-income groups, both aspects must be considered comprehensively.'
The nominee emphasized 'productive finance' to ensure that funds from the financial sector are supplied more towards productive areas such as advanced technology, ventures, innovation, and local economies rather than the real estate market. He stated, 'Through adjustments to the risk-weighted assets (RWA) for mortgage loans and the restructuring of macro-prudential regulatory systems, we will manage the flow of funds that is currently disproportionately directed at household loans systemically.' The financial authorities are considering raising the lower limit of the risk-weighted asset ratio for mortgage loans from the current 15% to 25%. An increase in the risk-weighted asset ratio will reduce the loan limit.
The nominee commented on the financial commission's reorganization, saying, 'It is inappropriate to express opinions on specific issues when detailed reform plans for the financial supervision system have not been made public.' However, he added, 'I know that a significant revision of various financial-related laws will fundamentally be necessary for the reform of the financial supervision system.'
The Presidential Committee on Policy Planning is pushing a plan to transfer the financial policy functions of the Financial Services Commission to the Ministry of Economy and Finance, and to merge the supervisory functions of the Financial Services Commission with the Financial Supervisory Service to revive the financial supervisory committee. If realized, it will be inevitable that the Financial Services Commission is dismantled.
Meanwhile, the nominee addressed virtual assets, stating, 'They are characterized by lacking intrinsic value, which distinguishes them from traditional financial products like deposits and securities,' and added, 'Given the high price volatility, it is difficult to consider them as performing essential monetary functions such as value storage and exchange.' Regarding whether to allow investments in virtual assets in retirement and personal pension accounts, he noted, 'There are many concerns that the high price volatility and speculative nature are problematic for stable income protection in retirement.'
Regarding stablecoins, he stated, 'As several related bills have been submitted in the National Assembly, we will carefully consider providing innovative opportunities while also ensuring sufficient safety measures through close consultations with relevant ministries.'
He provided a general response regarding the introduction of exchange-traded funds (ETFs) based on major virtual assets like Bitcoin. The nominee noted, 'I understand that there are diverse expectations and concerns regarding the impact of introducing Bitcoin spot ETFs,' and added, 'We will consider various opinions and global regulatory trends comprehensively to establish the introduction method and schedule and will consult with the National Assembly.'