Deputy Prime Minister and Finance Minister Kim Dong-yeon on Wednesday urged the financial circles to grow out of their loan-focused business practices and to play innovative roles so as to contribute to the nation’s growth target this year.

He also tendered a private meeting with the Bank of Korea Gov. Lee Ju-yeol, seeking to harmonize the government’s fiscal and monetary policies amid persisting challenges.

“The financial circles should play their due rule for the sake of our economy’s 3 percent growth this year,” Kim said in a New Year’s meeting with the leaders of financial organizations.

The gathering, held at Lotte Hotel Seoul, was cohosted by the Korea Federation of Banks, Korea Financial Investment Association, Korea Life Insurance Association, General Insurance Association of Korea, Korea Federation of Savings Banks, and Credit Finance Association.

One of the minister’s suggestion was that financial organizations shift their business paradigm from the conventional loan-focused model to a new investment-centered one.

The government earlier set the economic growth rate for 2018 at 3 percent and forecast that the per capita gross national income will exceed the $30,000 mark this year.

“Our top task is to boost the people’s quality of life so as to match (the improved general income level),” Kim said.

The central bank chief Lee underlined that given the country’s economic recovery trend and financial stability, a comprehensive restructuring is needed for the sake of radical reform and long-term development.

“(Year 2018) is the best time to restructure marginal companies,” he said at the meeting.

The monetary policymaker also pointed out to the persisting challenges such as income disparity, trade protectionist moves around the globe and the geopolitical risks on the Korean Peninsula.

“In times of economic recovery, one may easily overlook or underestimate these risk factors, which is why it is all the more important to thoroughly review the adequacy of fund distribution and market pricing,” he said.

Meanwhile, Kim and Lee are set to meet over breakfast on Thursday to discuss pending economic issues and to promote policy cooperation, marking their fourth one-on-one meeting since Kim took office last year, according to the Finance Ministry.

“They will be exchanging opinions about economic agendas in general, not about a specific issue,” said an official of the BOK.

One of their issues of interest is expected to include the incoming key interest rate hike, a much-anticipated move to take place within the year, in step with the US Fed‘s tightening gesture. The BOK raised the policy rate from the record-low 1.25 percent to 1.5 percent in November, making the first increase in more than six years.

By Bae Hyun-jung (tellme@heraldcorp.com)