Kim Yong-hwan, who has spent more than four decades on the front lines of South Korea’s financial sector, warned that today’s conditions resemble the 2008 global financial crisis. Kim, who served as senior deputy governor of the Financial Supervisory Service in 2008, was involved in the country’s response at the time.
In a telephone interview with Aju Economy on the 19th, Kim said the collapse of subprime mortgages in 2008 has “only changed form,” now appearing as troubled private lending tied to U.S. big tech companies in 2026. “Anxiety is rising that it is similar to that time,” he said, adding that uncertainty at home and abroad is unusually high.
Private lending refers to companies borrowing through funds raised by nonbank financial firms, a form of private debt. As concerns grow about potential weakness centered on U.S. big tech, it has emerged as a new flashpoint in global finance. With the global private-lending market swelling to the trillions of won, rising delinquency at some firms and fears of tighter liquidity are, critics say, rapidly building “hidden risks.”
Kim said that when global shocks hit, South Korea’s markets tend to swing more sharply than those of major economies. With tensions rising in the Middle East, domestic stocks have been seesawing by roughly 10%. He attributed the volatility to a narrow investment base rather than weak fundamentals. “It’s not that Korea’s fundamentals are weak, but the capital market is not broad-based, so the financial market is more exposed to volatility,” he said, arguing that a deeper direct-financing market would make Korea less sensitive to external shocks.
He also voiced concern about Korea’s growth structure. “Only a very small number of conglomerates such as Samsung, SK and Hyundai are doing well, while small and mid-sized firms continue to struggle,” Kim said. He added that per capita gross national income has failed for 12 years to break through the $30,000 threshold, and said Korea should consider whether it can grow like Taiwan, which entered the $40,000 era last year.
Unlike South Korea, where a handful of large companies account for most exports and investment, Taiwan is often assessed as having a more dispersed industrial base built around small and mid-sized firms. Kim said Korea needs a structure in which large companies and smaller firms grow together for stable development, underscoring the need for balanced growth.
Drawing on experience with multiple financial crises and industrial shifts, Kim advised younger officials that the most important thing in policymaking is to avoid haste and keep the big picture in view. “Especially in an era like this, when people expect AI to solve everything, policymakers need judgment and balance that come from experience,” he said.
Kim entered public service in 1979 through the 23rd class of the state civil service exam and held posts including director of the Welfare and Living Affairs Division at the Ministry of Finance and Economy, director general of Supervisory Policy Bureau II at the Financial Supervisory Commission, standing commissioner at the Financial Services Commission, and senior deputy governor at the Financial Supervisory Service. He later served as president of the Export-Import Bank of Korea and chairman of NH NongHyup Financial Group, and now works as an adviser at Shin &u0026 Kim. Earlier this month, he published a memoir, “Flow Like Water, Stand by Principles.”
* This article has been translated by AI.
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