Lee Ju-yeol and Ko Seung-beom, 'Pledge to Resolve Household Debt' (Comprehensive Report 2)

First Exclusive Public Meeting with the Financial Services Commission Chairman After President Lee's Inauguration

Lee Ju-yeol, Governor of the Bank of Korea (right), is embracing Ko Seung-beom, Chairman of the Financial Services Commission, before their meeting on the morning of the 3rd at the Bank of Korea in Jung-gu, Seoul. Photo by Kang Jin-hyung aymsdream@

Lee Ju-yeol: "Risks of Financial Imbalances Accumulate Due to Asset Market Concentration and Household Debt Increase"

Ko Seung-beom: "Urgent Need for Proactive Management... Must Respond Precisely Through Close Policy Coordination and Collaboration"

[Asia Economy Reporters Kim Eun-byeol, Kim Jin-ho] Lee Ju-yeol, Governor of the Bank of Korea, and Ko Seung-beom, Chairman of the Financial Services Commission, held their first meeting on the 3rd. Since Governor Lee took office in April 2014, this is the first time he has had a public one-on-one meeting with the Financial Services Commission Chairman. This is interpreted as a signal to the market of their determination to resolve the 'household debt issue' and to respond with policy measures.

Governor Lee and Chairman Ko met at 10 a.m. at the Bank of Korea's main conference room in Jung-gu, Seoul, and discussed the COVID-19 situation and risks of financial imbalances for about 30 minutes.

The statements from the heads of monetary and financial policy clearly show their willingness for policy coordination. Governor Lee said at the meeting, "Recently, risks of financial imbalances have been accumulating due to the concentration of funds in the asset market and the increase in household debt," adding, "We can mitigate these by appropriately operating monetary and macroprudential policies." Chairman Ko also emphasized, "Proactive management to resolve financial imbalances is urgent," and "The Bank of Korea and the Financial Services Commission must respond precisely through close policy coordination and collaboration." After arriving at the Bank of Korea, Chairman Ko also told reporters, "Although today is an introductory meeting, we will discuss issues such as the real economy situation and household debt management, including financial imbalance issues."

The Bank of Korea also explained in a press release that "Along with congratulatory greetings to the new chairman, both sides agreed to share information and exchange opinions more actively, coordinate closely, and work in harmony." Chairman Ko has served as a Monetary Policy Committee member at the Bank of Korea for over five years and has a close relationship with the Governor.

As household debt risks have increased, the Bank of Korea raised the base interest rate by 0.25 percentage points last month. With additional hikes expected within the year, both sides expressed their intention to strengthen communication with the financial authorities, considering the significant impact on the market and households. Chairman Ko said, "Since I have been a Monetary Policy Committee member for five years and four months, today is an introductory meeting," adding, "I will meet Governor Lee as often and as much as possible going forward." Governor Lee also said, "This is an important time," and "(Chairman Ko and I) have worked together at the Bank of Korea for over five years, so we have repeatedly pledged to always communicate and meet without being bound by formality or protocol."

However, since difficulties remain for vulnerable groups, separate measures will be prepared to support economic and livelihood recovery. Governor Lee said, "Difficulties in vulnerable sectors continue, so support policies targeting them need to be sustained," adding, "The Bank of Korea will also strengthen efforts to support vulnerable sectors through loan systems." This refers to supporting COVID-19-affected companies through the Financial Intermediation Support Loan system.

Meanwhile, Chairman Ko also held his first introductory meeting with Jeong Eun-bo, Governor of the Financial Supervisory Service, the day before. Both emphasized "communication and cooperation" as their top priorities. They agreed on the need to end the conflict phase between the two institutions that arose during the tenures of former Financial Services Commission Chairman Eun Sung-soo and former Financial Supervisory Service Governor Yoon Seok-heon. Accordingly, Chairman Ko promised full support at the organizational and budgetary levels to enable the Financial Supervisory Service to effectively carry out its heavy workload.

This content was produced with the assistance of AI translation services.