Financial watchdog vows to strengthen market stability

SEOUL, Sept. 7 (Yonhap) -- South Korea's financial watchdog will beef up its
monitoring of financial markets and preemptively act to prevent any sign of
market instability, the top financial regulator said Monday.

"There are still some latent risks in the economy, such as unemployment, the
recent hike in the real estate market, and rising household debt ... We will act
promptly to contain any potential risk before it becomes a serious threat to the
overall economy," Chin Dong-soo, chairman of the Financial Services Commission
(FSC), told a press conference with foreign correspondents here.
His remarks came as the Financial Supervisory Service said Friday it will impose
limits on bank mortgage lending in the capital Seoul and two adjacent areas to
curb a recent surge in such loans. The move follows its strengthening of similar
rules on home-backed loans in July.
Amid rising housing prices, increasing home-backed loans are widely feared to
raise household debt and spark possible asset inflation down the road when the
economy begins to pick up.
"We will look particularly closely at the increased liquidity generated in the
process of overcoming the financial crisis, therefore ensuring that it does not
become a source of market instability," Chin said, adding that the watchdog will
keep close tabs on trends in short-term funds and bank lending and take action if
necessary.
sooyeon@yna.co.kr
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