The Bank of Korea Monetary Policy Committee: "Normalization of Financial Easing Measures... Selective Support Through Fiscal Policy"

Minutes of the 19th Monetary Policy Committee Meeting of 2021 Released on the 12th

[Asia Economy Reporter Jang Sehee] The Financial Monetary Policy Committee of the Bank of Korea stated that financial support should be provided through fiscal measures to compensate for difficulties that may arise in vulnerable sectors during the normalization of financial easing measures. Selective support through fiscal policy will be necessary if shocks to vulnerable sectors intensify in the future.

In the 'Minutes of the 19th Financial Monetary Policy Committee Meeting in 2021' released by the Bank of Korea on the 12th, several committee members expressed the opinion that "continuous attention should be paid to youth, self-employed individuals, and marginal companies, who may be relatively vulnerable to domestic and external shocks."

Some members noted, "The increase in household loans among the youth may be a structural phenomenon, so it is necessary to approach it from a different perspective than in the past," adding, "A more in-depth analysis is needed regarding the interconnections between income levels, asset accumulation, asset prices, and credit risks among each vulnerable group."

They assessed that despite the resurgence of COVID-19, the domestic economic recovery and the smooth functioning of the financial intermediation system have been maintained stably. Furthermore, they evaluated that financial market volatility remains at a low level and that the loss-absorbing capacity of financial institutions is robust.

However, they foresaw that potential vulnerabilities from a mid- to long-term perspective remain high, as financial imbalances deepen due to continued sharp increases in housing prices.

Meanwhile, some members stated, "Most domestic corporate investment is carried out by large corporations, and corporate investment can be significantly influenced by future growth potential beyond just debt ratios." They added, "Regarding government debt, continuous attention is necessary considering trends such as low birth rates and population aging."

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