ID :
114330
Wed, 03/31/2010 - 13:20
Auther :
Shortlink :
https://oananews.org//node/114330
The shortlink copeid
Outgoing BOK chief warns against rising household debt
SEOUL, March 31 (Yonhap) -- The outgoing governor of South Korea's central bank on Wednesday called for vigilance against rising household debt, saying it could dent financial stability and economic growth.
"We should not lower our guard against excessive household debt, as it could
bring about financial instability and create a large burden on the economy by
denting the country's growth potential," Bank of Korea (BOK) Gov. Lee Seong-tae
said in a ceremony marking his farewell. His four-year term ended the same day.
South Korea's household credit, including credit purchases and lending, stood at
733.7 trillion won (US$648.4 billion) as of the end of last year, up 6.6 percent
from three months earlier, according to the BOK.
Low borrowing costs and rising housing prices prompted more people to take
mortgage loans from banks, leading the financial watchdog to put regulatory loan
controls in place late last year. But concerns have lingered over the pace of
household debt growth, as a potential rate hike by the central bank would dent
households' capacity to service debt.
Gov. Lee reported to President Lee Myung-bak last week that although Korea's
household debt is not at a level which threatens financial stability, the
government needs to properly cope with household debt as it could dampen
consumption and the country's growth potential in the mid and long term.
The central bank head also emphasized the importance of a timely exit from
emergency steps adopted to fight the global financial meltdown.
"It is important to gradually normalize the emergency measures in a way that does
not impose a burden on the economy," Lee said.
The BOK froze the key interest rate at a record low of 2 percent for the 13th
straight month on March 11. Lee has said that the level of 2 percent is too low
if the economy grows around 5 percent this year.
Kim Choong-soo, widely seen as dovish, will take office Thursday as the new BOK
governor. Market players have bet that any potential rate hike is likely to be
pushed back into the second half as Kim is expected to align with the government,
which is opposed to a rate increase in the near term.
sooyeon@yna.co.kr
(END)
"We should not lower our guard against excessive household debt, as it could
bring about financial instability and create a large burden on the economy by
denting the country's growth potential," Bank of Korea (BOK) Gov. Lee Seong-tae
said in a ceremony marking his farewell. His four-year term ended the same day.
South Korea's household credit, including credit purchases and lending, stood at
733.7 trillion won (US$648.4 billion) as of the end of last year, up 6.6 percent
from three months earlier, according to the BOK.
Low borrowing costs and rising housing prices prompted more people to take
mortgage loans from banks, leading the financial watchdog to put regulatory loan
controls in place late last year. But concerns have lingered over the pace of
household debt growth, as a potential rate hike by the central bank would dent
households' capacity to service debt.
Gov. Lee reported to President Lee Myung-bak last week that although Korea's
household debt is not at a level which threatens financial stability, the
government needs to properly cope with household debt as it could dampen
consumption and the country's growth potential in the mid and long term.
The central bank head also emphasized the importance of a timely exit from
emergency steps adopted to fight the global financial meltdown.
"It is important to gradually normalize the emergency measures in a way that does
not impose a burden on the economy," Lee said.
The BOK froze the key interest rate at a record low of 2 percent for the 13th
straight month on March 11. Lee has said that the level of 2 percent is too low
if the economy grows around 5 percent this year.
Kim Choong-soo, widely seen as dovish, will take office Thursday as the new BOK
governor. Market players have bet that any potential rate hike is likely to be
pushed back into the second half as Kim is expected to align with the government,
which is opposed to a rate increase in the near term.
sooyeon@yna.co.kr
(END)
