Go Seung-beom "Considering Exemption Measures from Total Volume Regulation for Low-to-Medium Credit Borrowers and Policy Finance"

Financial Services Commission Chairman Announces 'Next Year's Financial Policy Direction'

On the morning of the 3rd, Go Seung-beom, Chairman of the Financial Services Commission, held an online press briefing at the Government Seoul Office in Jongno-gu, Seoul, where he explained the achievements of the financial policies pursued so far and future plans, followed by a Q&A session.

[Asia Economy Reporter Kim Jin-ho] Ko Seung-beom, Chairman of the Financial Services Commission, stated that regarding the implementation of total household loan volume control next year, the commission is considering providing incentives for loans to middle- and low-credit borrowers and policy financial products such as the Bogeumjari Loan.

According to the Financial Services Commission on the 5th, Chairman Ko announced the 'Financial Policy Direction for Next Year' centered on this content at a year-end press briefing held at the Government Seoul Office on the 3rd.

Chairman Ko said, "In next year's total household loan volume control, we plan to provide incentives for loans to middle- and low-credit borrowers and policy-based financial products for low-income earners," adding, "We are also considering practically excluding them from the total volume limit." He continued, "We firmly believe that the handling of policy-based financial products for low-income earners must not shrink during the total volume control process, and we will finalize specific incentive applications through consultations within this month."

The financial authorities have set the household loan growth target for next year at 4-5%. Accordingly, major commercial banks are reported to have set their growth targets for next year at around 4-5% in line with this guideline. However, as Chairman Ko mentioned, if loans to middle- and low-credit borrowers or policy-based financial products for low-income earners are excluded from the total volume limit, banks are expected to significantly reduce the burden of profitability deterioration next year.

When asked whether the total loan volume regulation might increase inconvenience for low-income earners considering recent COVID-19 variants (Omicron), Chairman Ko responded, "We plan to stabilize at the household debt growth target of 4-5%," but left room for flexibility by saying, "We will respond flexibly while monitoring real economy trends such as economic growth rate and inflation."

He added, "Since the debt service ratio (DSR) at the borrower level will be implemented next year, we expect that more systematic and much more flexible household debt management will be possible compared to this year."

Regarding concerns that Korea might enter a 'Lost 20 Years' similar to Japan, Chairman Ko said, "Although household debt has surged and financial imbalances have accumulated, the possibility of systemic risk spreading is not high."

When asked whether excluding jeonse loans from this year's total household loan regulation was a measure influenced by political pressure ahead of the presidential election, he said, "We have repeatedly stated that we will strengthen household debt management while minimizing damage to actual borrowers," and emphasized, "The exclusion of total loans should be understood in this context."

On the full resumption of short selling, he emphasized, "It is a path we must eventually take." Chairman Ko said, "We will comprehensively consider market conditions and review the methods and timing of resuming short selling," and denied rumors, saying, "It is not true that the Ministry of Economy and Finance discussed the timing of resuming short selling."

Regarding the disciplinary procedures for financial companies related to the private equity fund incident, he said, "We will ensure objective and fair sanctions, and especially proceed according to laws and principles."

Meanwhile, in his opening remarks before the press briefing, Chairman Ko stated that next year's Financial Services Commission policy direction will focus on ▲ efforts to alleviate financial imbalances ▲ support for low-income and vulnerable groups ▲ inspection of financial sector soundness and stability.

Chairman Ko said, "Unlike major countries where government debt has surged, in Korea, household and corporate sector debt has increased faster and more significantly," adding, "We will actively respond not only to household debt but also to the debt problems of small business owners and self-employed individuals."

He also explained about the COVID-19 loan maturity extension and interest payment deferral measures ending in March next year, saying, "We will prepare delicate soft-landing measures related to rapid repayment burden relief and debt restructuring." Furthermore, he said, "We will strive to prevent financial difficulties for low-income and vulnerable groups from worsening, while also promoting a comprehensive inspection of the soundness and stability of the financial industry."

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