Heads of Finance and Monetary Policy Agree on the Need for Proactive Household Debt Management

Financial and monetary policy leaders are exchanging opinions. From the left, Seung-beom Ko, Chairman of the Financial Services Commission; Nam-ki Hong, Deputy Prime Minister and Minister of Economy and Finance; Ju-yeol Lee, Governor of the Bank of Korea; Eun-bo Jeong, Governor of the Financial Supervisory Service. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Kwangho Lee] Heads of institutions leading financial and monetary policies unanimously emphasized the "risks of household debt and the need for proactive management."

On the 4th, Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, stated, "While striving for the stable management of household debt, we will grant sufficient limits to ensure that funds for the real demand of low-income groups are supplied without disruption."

Deputy Prime Minister Hong said, "I hope efforts such as managing this year's household debt growth rate target and expanding installment repayments to improve qualitative soundness are thoroughly implemented on the ground," adding, "The government will also work with the financial sector for the stable management of household debt and grant sufficient limits to ensure that funds for the real demand of low-income groups are supplied without disruption."

He continued, "Attention must also be paid to the increased debt repayment burden due to rising market interest rates and asset price fluctuations," and said, "In particular, I hope the financial sector strengthens its self-inspection efforts so that the market impact during the adjustment of abundant liquidity, which increased during the low-interest and crisis response process, does not become significant."

Lee Ju-yeol, Governor of the Bank of Korea, also urged thorough risk management. Governor Lee emphasized, "During the normalization process of financial easing measures, there is a possibility of expanded credit risk centered on some households and self-employed individuals facing excessive leverage (borrowing) and sluggish business conditions," adding, "Given the very high domestic and international uncertainties, these internal vulnerabilities can act as weak links in the financial system, so we must monitor them closely and prepare for potential risks."

Ko Seung-beom, Chairman of the Financial Services Commission, said, "We will maintain a watertight financial stability system," and added, "While consistently strengthening household debt management, we will also implement protective measures for the underprivileged and vulnerable groups." He further stated, "We will closely examine the stability of the short-term funding market, the crisis response capacity of the non-bank sector, and address vulnerabilities."

Jung Eun-bo, Governor of the Financial Supervisory Service, also stated, "The top priority this year is proactive supervision of potential risks."

Governor Jung explained, "The soundness of domestic financial companies and market resilience are relatively good, but if latent risks materialize, their impact will be widespread and scarring effects may persist, making proactive management important."

Meanwhile, the ‘2022 Pan-Financial New Year Meeting’ was converted from holding a New Year meeting due to COVID-19 to sharing New Year addresses from four major institution heads?the Deputy Prime Minister and Minister of Economy and Finance, the Chairman of the Financial Services Commission, the Governor of the Bank of Korea, and the Governor of the Financial Supervisory Service?along with an encouragement speech from the Chairman of the National Assembly’s Political Affairs Committee with financial industry personnel.

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