South Korea’s Financial Services Commission (FSC) has outlined an ambitious agenda to overhaul the country’s financial system, positioning reform as a central pillar in driving the next phase of economic growth.
The plans were presented during a joint government work report session with the Korea Fair Trade Commission on 19 December, held under the theme of “pursuing a sweeping overhaul of finance, fostering a fair economy, and building robust foundations to propel a great takeoff of the economy”.
At the session, FSC chairman Lee Eog-weon detailed the regulator’s progress over 2025 and set out policy priorities for the year ahead, framing financial reform as essential to making the sector more productive, inclusive, and reliable. The FSC’s vision centres on strengthening support for households and businesses, tightening market discipline, and laying the groundwork for long-term innovation across the financial industry.
Over the past six months, the commission has focused heavily on easing pressure on household finances following the combined impact of the COVID-19 pandemic and a prolonged high interest rate environment. A cornerstone of this effort was the launch of the New Leap Fund in October, which enabled the acquisition, screening, and cancellation of long-term overdue personal debt for around 1.13 million individuals, without requiring applications from affected debtors. In parallel, credit recovery measures introduced at the end of September led to the expungement of overdue debt histories, allowing approximately 2.86 million people to regain access to the financial system by the end of November.
Support for small businesses has also been a priority. The FSC conducted multiple on-the-ground meetings with small merchants to better understand operational challenges and followed up with a special financing support programme valued at more than KRW10trn. These interventions were designed to stabilise livelihoods while preventing longer-term scarring within the real economy.
Alongside targeted support, the regulator has taken steps to address systemic risks and market integrity. Strengthened household debt management measures introduced in June curtailed loan access for speculative property buyers, helping to slow the pace of household debt growth.
The FSC also coordinated with policy lenders and private financial institutions to support domestic companies facing tariff-related pressures, while launching a joint response team to combat stock market manipulation. Enforcement has been tightened through stricter penalty surcharge criteria and the introduction of individual-based market surveillance under a “one strike out” principle.
Looking to the future, the FSC has begun laying the foundations for financial innovation and long-term competitiveness. A KRW150trn National Growth Fund has been established to bolster strategic industries amid intensifying global competition. Additional measures include reforms to bank capital regulation to direct more funding towards productive sectors, policies to promote balanced regional development, and the authorisation of new investment management account operators with obligations to supply venture capital. In response, private financial institutions have pledged more than KRW603trn in funding over the next five years, while the KOSPI index recently surpassed the 4,000 mark for the first time.
From next year, the FSC plans to pursue these reform agendas more aggressively, signalling a decisive push to reshape South Korea’s financial system as a catalyst for sustainable economic expansion.
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