Regulator firmly sticks to debt relief plan
Kim Joo-hyun, chairman of the Financial Services Commission, speaks during a press briefing at the government complex in Seoul on Monday. (FSC)
South Korea’s top financial regulator said on Monday its plan to help low-income people reduce their debt burdens did not encourage reckless investments in stocks or real estate, amid criticism that young Koreans who suffered losses because of these investments could repay their debts with taxpayers’ money. .
“We don’t help those who had to cut their losses on stocks and cryptocurrencies to pay loans (taken out for investment purposes),” Kim Joo-hyun, chairman of the Securities Commission, told reporters. financial services, four days after his agency revealed a debt relief plan, which many believed included those investors.
The plan – part of a broader government relief package to help ‘vulnerable groups’ of young Koreans fresh out of college, the self-employed and small business owners amid rising unemployment rates. Interest – is about offering them better loan deals and extending their repayment. periods.
Young Koreans who had taken out loans at lower rates to buy stocks and digital currencies now find themselves struggling, economically and psychologically, the agency said last week when unveiling the plan, referring to people generally aged 19 to 39.
This caused a public outcry over whether it was right to write off such debts, when the agency could better use its resources, including taxpayers’ money, in helping Koreans facing a crisis of the life like COVID-induced bankruptcy, which warrants more immediate action. assistance.
“The way we’ve portrayed the young people’s situation, I think, might raise concerns about moral hazard…we were just trying to convey urgency,” Kim said, noting the agency won’t endorse the release. reduction of principal payments and will carefully select qualified candidates. to have their interest payments reduced.
The government money that will be used to achieve this does not contradict what the Bank of Korea is trying to achieve, Kim added, referring to the central bank’s efforts to tame runaway inflation. The bank raised its borrowing costs to a record high last week.
“The bank has its objectives. From our side, we are doing our job helping those who need it most in order to prevent a bigger crisis,” Kim said.
Later in the afternoon, Kim met with BOK Governor Rhee Chang-yong and pledged to work closely on policy coordination, the agency said in a statement, calling the harmonization priority monetary and financial policies. It was the first time the two chiefs had met since Kim took office last Monday.
By Choi Si-young ([email protected])