SEOUL– The head of the Bank of Korea (BOK) and the new chief of the financial regulator agreed Friday to join forces to ease financial imbalances, including curbing household debts.
In their first meeting, BOK Gov. Lee Ju-yeol and Koh Seung-beom, the new chairman of the Financial Service Commission (FSC), also agreed to provide support for small merchants hit hardest by the fourth wave of the COVID-19 pandemic, the BOK said in a statement.
Monetary policy and macroeconomic measures are needed to ease the build-up of financial imbalances, Lee told the meeting.
Koh said “preemptive” measures are necessary to curb surging household debts, according to the statement.
Households’ high indebtedness has been cited as the main bugbear for the South Korean economy.
South Korea’s household credit grew at a faster pace in the second quarter as non-banking financial firms increased loans.
Household credit reached a record high of 1,805.9 trillion won (US$1.54 trillion) as of June, up 41.2 trillion won from three months earlier, according to the BOK data.
The second-quarter tally compared with a 37.6 trillion-won on-quarter rise in the first quarter.
The growth has shown no signs of letting up as more people have taken out loans to buy homes amid skyrocketing housing prices. Demand for unsecured loans also remains high amid a boom in stock investments.
Source: Yonhap News Agency