Jang Yongseong, KFTC Member, "Proactive Measures Needed to Reduce Household Debt"

Concerns Over Financial Imbalance Due to Rising Housing Prices Centered in the Capital Region

Jang Yong-seong, Member of the Monetary Policy Committee, Bank of Korea

There have been calls for proactive macroprudential management measures to prevent financial imbalances caused by the increasing trend in household loans.

On the 26th, Jang Yong-seong, a member of the Financial Monetary Policy Committee of the Bank of Korea, explained in the Financial Stability Report, "Recently, housing prices have continued to rise mainly in the metropolitan area, and the increase in household loans has raised concerns about the accumulation of financial imbalances."

Committee member Jang emphasized, "To ensure a downward stabilization of the household debt ratio, it is necessary to maintain a strengthened macroprudential management stance and consider proactive responses through additional measures if needed."

He added, "It is expected that the effects of major government measures, such as the housing supply plan and household debt management plan announced last month, will gradually appear. However, as expectations for eased financial conditions rise due to interest rate cuts in major countries like the United States, it is important to continuously coordinate macroprudential policies while monitoring the effectiveness of government measures."

In particular, he suggested the need to refer to policy operation cases of major countries such as Canada, which have strengthened macroprudential policies alongside policy rate cuts.

Regarding risks in vulnerable sectors, he anticipated, "Although stricter feasibility assessment standards have been applied to real estate project financing (PF) and non-performing loans have increased, related risks are expected to gradually ease if financial institutions' resolution plans are implemented without setbacks."

However, he added, "It is important to continue restructuring efforts as vulnerable self-employed individuals and marginal companies are showing signs of accumulating insolvency."

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