FSC Chairman holds meeting and emphasizes importance of comprehensive efforts to manage debt risks: "Current economic conditions at home and abroad appear to be reaching an inflection point"

Today, Financial Services Commission (FSC) Chairman Kim Byoung Hwan held a meeting with macroeconomic and financial market experts to review and manage financial risks. key takeaways from the meeting include:

• Evaluating financial risks in four areas: household debt, real estate project finance, small business debt, and the soundness of the nonbanking sector.
• Chairman Kim highlighted that the current economic conditions, both domestically and internationally, are at a critical juncture, necessitating closer examination and more effective responses to market risks.
• Emphasizing the importance of moving away from a debt-reliant model, Chairman Kim called for structural changes to ensure sustainable growth, resilience, and financial stability.
• The meeting underscored the need for comprehensive efforts to manage debt risks effectively and maintain the soundness of the financial system.

Efforts will concentrate on managing debt risks in four specific areas: household debt, real estate project finance, small business debt, and the soundness of the nonbanking sector. The government aims to address accumulated debt risks and preemptively manage emerging risk factors as the relatively high levels of debt-to-GDP ratio and reliance on debt make domestic financial system vulnerable to external shocks.

However, FSC calls out that this WILL NOT be at the expense of short sale reform measures:

Furthermore, FSC emphasizes the need for sustainable growth and financial stability, the government seeks to transition from a debt-reliant model to an equity-centered approach. They aim to operate various debt management mechanisms, such as strengthening debt service ratio (DSR) rules, managing project finance debt, providing debt restructuring assistance to small businesses, and enhancing the loss-absorbing capacity of the nonbanking sector.

"Current economic conditions at home and abroad appear to be reaching an inflection point"

"The relatively high levels of debt-to-GDP ratio and reliance on debt make domestic financial system vulnerable to external shocks."

TLDRS:

• FSC Chairman Kim Byoung Hwan held a meeting with experts to review and manage financial risks in household debt, real estate project finance, small business debt, and the nonbanking sector.
• Chairman Kim emphasized the critical state of current economic conditions, both domestically and internationally, necessitating closer examination and more effective responses to market risks.
• The meeting highlighted the importance of transitioning from a debt-reliant model to ensure sustainable growth, resilience, and financial stability.
• The FSC stressed that these measures will not hinder short sale reform efforts and aim for a balanced approach to support sustainable economic growth.
• "The relatively high levels of debt-to-GDP ratio and reliance on debt make domestic financial system vulnerable to external shocks."
• "Current economic conditions at home and abroad appear to be reaching an inflection point"
• Buckle up!