The Korean government’s financial policy for next year focuses on deregulation, laying the groundwork for future growth and risk management.
The government is going to relax financial regulations for the promotion of fintech, or financial technology, while allowing the establishment of Internet banks in the long term. In addition, it is coming up with measures for preventing risks such as foreign investment outflow and household debt increases affecting financial companies.
In a recent meeting presided over by Financial Services Commission Chairman Shin Je-yoon, the Korea Institute of Finance said that investment in fintech should be boosted with the combination between finance and technology becoming a global trend. It also suggested a policy direction for the establishment of Internet banks, which has shown little progress due to banking-commerce separation, and asked the government to strengthen credit card payment security while setting up data and information systems to provide against account switching. “Incentives need to be provided for banks engaged in technical evaluation so that technology financing can be revitalized,” an institute representative said. He also added, “An organization to supervise financial services for the middle and lower classes would be of much help.”
The Korea Insurance Research Institute (KIRI), in the meantime, advised that the insurance policy for 2015 should concentrate on consumer protection and financial soundness while insurance coverage is allowed to be expanded along with market autonomy. “The slow premium growth in the insurance industry continued this year, but the sector’s total assets significantly increased from 459 trillion won [US$418 billion] to 824 trillion won [US$751 billion] between 2009 and August this year,” a KIRI representative pointed out, adding, “The deterioration of the industry’s profitability has been rather limited this year, as the capital gains increased on stock sale.”
A Korea Capital Market Institute representative claimed that taxation systems in the capital market should be made better for venture capital promotion. The representative mentioned the specific methods of narrowing the gap between the transfer of income taxes on listed and over-the-counter stocks, and the reduction or abolition of the transaction tax. “The 20 percent transfer income tax on derivatives is excessively high, to the point of hindering trading in the derivatives and spot markets alike,” he commented, advising that non-taxation has to be maintained in derivatives trading. “The government would be wise to relax investment bank-related regulations so the net capital ratio of the stock market can be improved,” he concluded.