On the afternoon of the 6th, the financial policy evaluation symposium was held at the Bank Hall in Jung gu, Seoul. However, as the fire has been extinguished and interest rate hikes are expected, the main tasks are to deal with the blow to vulnerable sectors and to ease household debt.
Financial authorities emphasized the need for their own tapering (reduction of quantitative easing) in the future. He urged both individuals and companies to preemptively normalize excess debt in preparation for rising interest rates. Experts such as the Financial Research Institute argued that a step-by-step return plan for COVID-19 financial support measures should be prepared, and emphasized the need for harmonization of fiscal, financial, and monetary policies. Some experts pointed out that indiscriminate liquidity supply is problematic.
On the afternoon of the 6th, the Financial Services Commission and the Financial Research Institute held the 'Corona 19 Response Financial Policy Evaluation Symposium' at the Bank Hall in Jung-gu, Seoul.
In a keynote speech, Financial Services Commission Chairman Eun Seong soo said, “The government has built an unprecedentedly thick firewall worth over 175 trillion won to quell fear and anxiety prevailing in the market. , and key industrial companies maintained their financial stability, so there were no chain bankruptcies or large-scale job instability,” he said.
Experts also gave high marks to the government's financial response to COVID-19. “The liquidity response to COVID-19 was quick and drastic and did a good job of absorbing the shock,” said Park Chang gyun, a senior research fellow at the Capital Market Research Institute and Park Seok-gil, head of JP Morgan. Kim Dong-hwan, head of the Alternative Finance Research Institute, evaluated that “there were many reasonable policies in the stock market, such as the sequential resumption of short selling and the imposition of capital gains tax on stocks,” said Kim So-young, a professor of economics at Seoul National University.
Various opinions were presented on future tasks. Chairman Eun Seong soo urged people to be aware of the possibility of ‘aftershocks’ after the COVID-19 crisis. “The sharp rise in private debt and rapidly rising asset prices in the course of responding to the crisis can bring another shock in conjunction with global austerity,” he said. In particular, please check your financial soundness to see if there is any problem with your repayment ability even if interest rates rise.”
It promised even more support for vulnerable sectors whose recovery was slow. Chairman Eun Seong su said, “The financial support program for small businesses will be operated until the private economy improves, and detailed support measures such as extension of loan maturity and deferment of interest payment will be devised.”
The Institute of Finance argued that a step-by step return to the temporary financial support measures currently in progress by the financial authorities is necessary. In order to prevent the aftereffects of the COVID-19 crisis, it is necessary to be cautious about ending temporary financial support programs such as limiting dividends and deferring loans and interest payments. Kim Young-do, a senior research fellow at the Korea Financial Research Institute, said, “As concerns remain, such as a taper tandrum following the rapid normalization, appropriate policy responses are needed at each stage, such as extending the corporate bond purchase mechanism.”
He also ordered monetary and fiscal policies to match the pace of recovery between developed and emerging countries. According to the World Bank, 94% of developed countries are expected to return to pre-COVID-19 levels within two years, while only 40% of emerging and developing countries are expected to return to their previous levels.
Senior Research Fellow Kim Young do said, “It is necessary to implement fiscal and financial policies that allow selective policies to support vulnerable sectors, and use a policy combination that uses monetary policy depending on the overall economic situation.”
“The foreign exchange market needs to check its financial vulnerabilities in preparation for an overseas interest rate hike, and the domestic financial market needs to come up with a plan for a soft landing in consideration of the weak financial situation, such as household debt,” he said.
Professor Kim So young raised the need for coordination of fiscal, financial and monetary policies. He said, “I would like to see a plan for each scenario as to how it is desirable to coordinate financial policies in response to interest rate hikes. should be coordinated. In particular, in the case of small business owners and the self-employed, there should be a package that comprehensively considers financial and financial support how to save after Corona 19,” he said.
Some experts pointed out that indiscriminate liquidity supply is problematic. Park Chang gyun, Senior Research Fellow, said, “There seems to be an aspect where liquidity is simply supplied as it goes to vulnerable sectors.
He continued, “If they increase their debt for the reason of providing liquidity to small business owners, there are a lot of people who will not be able to repay them later.
