Economic Leaders Mention Gray Rhino... "Suppress Household Debt as Much as Possible"

Hong Nam-ki "Suppress Household Debt as Much as Possible... Protect Real Demanders"
Household Debt Management Plan to be Announced in October

[Asia Economy Reporter Jang Sehee] The first meeting of the heads of economic, monetary, and financial authorities focused on the topic of 'household debt.' They reaffirmed their stance to curb the rapidly increasing trend of household debt. They anticipated that the volatility of financial markets would expand due to factors such as the upcoming tapering by the U.S. Federal Reserve (Fed) and rising domestic and international interest rates.

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, attended the macroeconomic and financial meeting held on the 30th at the Seoul Banking Hall and stated, "We will seek a direction that maximally suppresses the increase in household debt while allowing borrowers who genuinely need loans to borrow within their repayment capacity." He added, "We will prepare and announce household debt management measures within October." This is interpreted as a shared view on the need to resolve the issue of 'financial imbalance' caused by excessive borrowing for asset investment.

The meeting was attended by Lee Ju-yeol, Governor of the Bank of Korea, Ko Seung-beom, the newly appointed Chairman of the Financial Services Commission, and Jung Eun-bo, the newly appointed Governor of the Financial Supervisory Service. It was the first time in over seven months since February 18 that the heads of fiscal, monetary, and financial authorities gathered in one place. It was also the first meeting since Chairman Ko and Governor Jung took office last month.

They also discussed measures to prepare for domestic and international shocks arising from recent changes in economic conditions. Deputy Prime Minister Hong emphasized, "We cannot rule out the possibility of external risks emerging, such as delays in resolving global supply bottlenecks, rising domestic and international interest rates due to recent U.S. debt ceiling negotiations and tapering concerns, and increased volatility in stock and foreign exchange markets."

He added, "It is important to ensure that issues caused by widening disparities due to uneven recovery, weakening fundamentals of vulnerable groups and marginal companies, and liquidity expansion in real estate and household debt do not destabilize the economic recovery process." He also dispelled concerns about discord between fiscal and monetary policies raised by some quarters. Deputy Prime Minister Hong said, "During this transition period, meticulous and delicate policy coordination and cooperation among relevant authorities are absolutely essential, just as much as the joint efforts to respond to the COVID-19 crisis."

Meanwhile, the National Assembly Budget Office released an analysis titled 'Review of the U.S. Tapering Conditions and Implications,' stating that the stock and real estate prices, which rose rapidly in a short period after COVID-19, are highly likely to be adjusted by the upcoming tapering of the U.S. Federal Reserve. In fact, the KOSPI rose 61% from 1,987 in February 2020 to 3,199 in August 2021, and the housing price index increased by 10.3% from 123.4 in the first quarter of 2020 to 146.1 in the first quarter of 2021.

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