Financial performance and tasks of the Moon Jae-in Government

President Moon Jae-in has predicted strong financial reforms over the past year. However, it has been at odds over major financial institutions and Samsung Group as tycoons. It is now pointed out that because of the financial authorities are virtually all in the process of clearing the financial holdings and the Samsung Group, financial innovations are pushed to the forefront.

The Korea Institute of Finance, on May 6, stated in a report titled "Achievements and tasks of the Financial Sector in the 1st year of the Moon Jae-in Government, the blueprint for raising the low competitiveness of the Korean financial industry cannot be seen”.

Korea Institute of Finance estimates that the financial innovation tasks proposed by the Korean government in the early part of the regime have not lead to strengthening the competitiveness of the financial industry. Senior research fellow Lee Byung-yoon, at the Korea Institute of Finance, stated, "We should be cautious as the motivation may be overdone." If the reform of the banking system is overtaxed, the financial sector will be shrunk and lose confidence and become difficult to develop.” Especially, the researcher mentioned, "If the government tries to take the lead in everything, it must give direction and serve as a primer, and then leave it to the autonomous functions of the market." He warned.

The financial authorities point out that they have confused the market with private financial companies for the past year in the case of financial sector. Former FSS Chief Financial Officer Choi Ki-sik and Former Financial Supervisor Kim Ki-sik, both of Hanshin Financial Group and KBFG, are playing a so called `strong rivalry`.

The market has been increasingly confused by all-round pressure on Samsung Group in recent years. In April last year, the Financial Supervisory Commission demanded the sale of its stake in Samsung Electronics Co., Ltd., and declared a false declaration. On its first day, the Financial Supervisory Service is tightening the pressure on Samsung Biologics in 2016. Meanwhile, investors who have suffered damage because of unconfirmed accounting pronouncements are expected to file damages lawsuits. Also, the number of appeals filed by the Blue House is rapidly increasing. A financial institution specialist said, "The result of financial reforms that have seen the financial group, Samsung Group, as a result of a sudden change in the financial sector.”

Relatively financial innovation is being pushed back as the financial authorities have all come to the forefront of liquidation and liquidation of Samsung`s monopoly. The very large investment bank business started to creep right after.

Mirae Asset Daewoo, NH Investment & Securities, Samsung Securities, Korea Investment & Securities and KB Securities in November last year, were designated as `super large IB`. Consequently, the ultra-large IB business, which was actively promoted by the government in the past, has become virtually unmarked.

On the other hand, the easing of regulations on segregation of silver, which is at the forefront of Internet banking, is also unaffected. K-bank, Korea`s No. 1 Internet bank, has exceeded KRW 2 trillion in total transactions for one year. However, it is struggling to develop new products as it is stuck in the regulations on segregation of silver that obstructs the expansion of capital. The Korea Kakao Bank has also suffered from a capital increase of KRW 500 billion due to the limits on the separation of silver. The government has not moved a step further, saying that it is the responsibility of the National Assembly to relax regulations on segregation of segregated funds.

Economists, on the other hand, advise that the recognition of the financial industry by the government and its businesses as a form of abandonment is hard to anticipate, as well as bold innovations in financial markets. Yang Jun-mo a professor of economics at Yonsei University, pointed out, "The political approach to the financial industry can only raise economic turmoil." Financial innovation is a necessity to form a consensus in the financial market. However, confusion now is increasing. Financial innovation issues are disappearing, and political issues are being reproduced. "

By Kim Dong Wook • Cho Eun Gook east@


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