Korea has been the world's No. 1 country in terms of derivatives trading for more than a decade since 2001. However, in the wake of a series of incidents such as Deutsche Securities' "option shock" in 2010, financial authorities poured out intense regulations on the derivatives market. The message was that "blocking speculation" was a priority over "market activation."

Financial authorities' attitude in responding to the virtual asset frenzy in 2021 was also not much different. High-intensity regulations were imposed on the grounds that they could "shake system risk."

The logic of the authorities' response was clear. It is judged that if speculation overheats, the damage will eventually fall on the people and the financial system will also crack. There were warnings in the market that "excessive regulation could be a 'bridge killing', but the authorities countered that "investor protection is the priority."

However, the recent appearance of financial authorities is completely different from the past. Although various danger signals hidden by the KOSPI's surge are being turned on everywhere, they seem to be trying to turn a blind eye to them. Instead of warning, it even expresses a strange sense of relief.

Let's just look at a few indicators of the market. The balance of credit loans at the five major banks increased by more than 1 trillion won in just a week in November. The figure far exceeds the monthly increase (902.5 billion won) in October. The increase in negative bank loans is also the highest in the year. The increase in the number of people in their 20s and 30s who are vulnerable to risk is particularly steep. The balance of credit loans at securities companies surpassed KRW 26 trillion, surpassing the record of the bubble period in 2021, which was the highest ever.

These indicators point to the fact that one of the pillars supporting the so-called 'Cospy 4000 era' is debt investment. The combination of speculative frenzy and debt investment is a pattern that financial authorities with risk-averse instincts have been most wary of.

However, recent remarks by the heads of financial authorities directly reject this formula. Financial Services Commission Chairman Lee billion won said, "The increase in credit loans does not threaten the soundness of household debt," and Vice Chairman Kwon Dae-young said, "Debt investment is also a form of leverage investment."

Why did the "watchman" of Korea's financial stability put down the shield himself. The answer is not difficult. This is because the regime is overly dependent on the stock index. In a situation where high-flying stock prices cover up the regime's mistakes and serve as a safety valve for approval ratings, the financial authorities' primary goal is to boost stock prices, not financial stability. It is in the same vein that Lee Chan-jin, head of the Financial Supervisory Service, who caused controversy over real estate's "one-shot instructor," produced an "event" in which he sold an apartment in Gangnam and purchased products that follow the domestic stock index with part of the price.

There is already a saying in the market that the Lee Jae-myung government is an "equity-linked government (ELG)". Considering the stock index as if it were the government's insurance policy creates two problems.

First, policy responsiveness to market volatility rapidly declines. When you have to give a warning, you rather give a positive signal.

Second, the index built up by debt is vulnerable to shock. Once the counter-trading flares up, the debt-to-debt turns into a fuse of financial instability.

Now, the Korean stock market is more of a rally on a "thin ice sheet" created by debt and expectations, rather than a result of strengthening economic fundamentals and recovering the real economy. The contradictory policy of the Lee Jae-myung administration, which suppresses real estate "Youngchil" and effectively encourages stock "debt investment," could one day become a boomerang that will hamper the regime.

If the regime wants to stabilize the economy, it must first cut off the temptation to consume the stock index as a political achievement. Numbers can be reversed at any time.

If the regime really wants to protect financial stability and national assets, it should check debt-to-risk rather than boosting stock prices. The index is not an ornament of the regime, but a warning light that measures the safety of the national economy.

[Son Seon, the head of the finance department]