[2024 National Audit] Lee Chang-yong: "Some Opinions to Abolish Internal Financial Intermediation Support Loans... Need to Build Consensus"

Lee Chang-yong, Governor of the Bank of Korea, emphasized that a consensus must be formed on whether monetary policy should take on the role of fiscal policy in order to expand the limit of the Financial Intermediation Support Loan.

Lee Chang-yong, Governor of the Bank of Korea, is attending the National Assembly's Planning and Finance Committee's audit of the Bank of Korea held at the Bank of Korea in Jung-gu, Seoul on the 14th, responding to questions from lawmakers. Photo by Kang Jin-hyung aymsdream@

At the National Assembly's Planning and Finance Committee audit on the 14th, Governor Lee responded to criticism that the limit of the Financial Intermediation Support Loan (FISL), through which the Bank of Korea lends money at low interest rates to support vulnerable small and medium-sized enterprises, has remained unchanged for 10 years. He said, “There are very differing opinions internally, to the extent that some suggest abolishing the FISL, but due to the difficult situation, we are not abolishing it and are just maintaining it,” adding, “This issue can fundamentally move forward only after a consensus is formed that monetary policy should take on the role that fiscal policy performs.”

On the same day, Park Dae-chul, a member of the People Power Party, questioned, “The limit of the FISL has remained the same for 10 years since its implementation in 2014 at 5.9 trillion won,” and asked, “On the contrary, the number of beneficiary companies increased about threefold from 64,930 in 2014 to 198,946. Is there a plan to expand the loan limit?”

In response, Governor Lee said, “Regarding the Financial Intermediation Support Loan, internal opinions vary greatly, and basically, considering the difficulties faced by small and regional enterprises, there is a desire to increase the limit,” but added, “On the other hand, there is a fundamental issue that monetary policy is performing activities that should be done by fiscal policy.”

He continued, “It is the past framework that financial institutions perform the role of fiscal policy, but there is no consensus on whether it is appropriate to expand this,” and said, “There are views advocating for abolishing the FISL, but currently, it is not abolished and is maintained at the current level.”

Finally, he explained, “This issue can fundamentally move forward only after a consensus is formed that monetary policy should take on the role of fiscal policy,” and added, “At present, we are maintaining it without reducing it, only supplementing it to some extent.”

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