Financial Services Commission-Research Institutions Meeting: "Household Debt and PF Management Crucial Next Year"

The Financial Services Commission and financial research institutions have identified risk management of household debt and real estate project financing (PF) as key tasks for next year's financial policy.

Kim Ju-hyun, Chairman of the Financial Services Commission, is delivering opening remarks at the 'Financial Holding Company Chairmen Meeting' held on the 20th at the Korea Federation of Banks Building in Jung-gu, Seoul. Photo by Kang Jin-hyung aymsdream@

On the afternoon of the 18th, the Financial Services Commission announced that it held a 'Financial Services Commission-Research Institution Heads Meeting' at the Korea Institute of Finance in Jung-gu, Seoul, attended by Chairman Kim Joo-hyun. The meeting was attended by heads of major research institutions including the Korea Institute of Finance, Capital Market Institute, Insurance Research Institute, IBK Economic Research Institute, Hana Financial Management Research Institute, KB Financial Management Research Institute, and Korea Development Institute (KDI).

At the meeting, the economic outlook for next year was shared. The Hana Financial Management Research Institute predicted that the domestic economy next year would experience an 'imbalanced recovery,' with exports increasing due to improvements in global trade but domestic demand recovering slowly due to the prolonged high interest rates. In particular, it diagnosed that the financial industry is likely to slow down due to the low-growth trend and prolonged high interest rates.

In the subsequent policy proposals, many opinions emphasized the need for risk management of household debt and PF loans. Park Jong-gyu, president of the Korea Institute of Finance, said, “It is necessary to reduce the risks of debts accumulated during the COVID-19 period, such as household loans, loans to small and self-employed businesses, and real estate PF loans.” Kang Dong-soo, director of KDI, emphasized, “Since the real estate PF loans with severe insolvency are difficult to resolve in a short period, a strategy to determine survival based on business feasibility is necessary.”

There were also calls for soundness management in preparation for the expansion of marginal companies. Park Tae-sang, director of the IBK Economic Research Institute, said, “Currently, the banking industry is experiencing a slowdown in growth and profitability, and soundness management to respond to corporate insolvency is the top priority.” He added, “To this end, it is necessary to select and support companies facing liquidity crises, improve the technology finance system, and support export-oriented small and medium enterprises.”

There was also considerable advice on the role of finance for the livelihood economy. Han Dong-hwan, director of KB Management Research Institute, said, “While focusing on enhancing the role of finance in adapting to structural changes such as climate change, low birthrate, and aging, the financial sector itself must strive to restore public trust through win-win finance for vulnerable borrowers and strengthening internal controls.” Jung Jung-ho, director of Hana Financial Management Research Institute, also stated, “The role of finance in market stabilization and support for vulnerable groups and the elderly is necessary, as well as continuous financial industry innovation policies along with improvements in sales culture to protect financial consumers.”

Chairman Kim said, “Although the financial market conditions in 2023 were challenging, we have overcome them through joint efforts of research institutions, related ministries, and the financial sector.” He added, “However, potential vulnerabilities such as real estate PF and already high levels of household debt still remain, so strict management of latent risks and alleviation of burdens on the livelihood economy, including ordinary citizens and self-employed individuals, are necessary.”

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