Lee Ju-yeol warns of’debt struggle’ fever… “It will be difficult to handle excessive leverage”

Lee Ju-yeol, governor of the Bank of Korea, sent a’warning’ to the craze for debt (invest in debt).

This is due to concerns that investment based on excessive leverage could lead to enormous losses in a situation where uncertainty in the real economy increases.

◆ “The stock rises quickly, shakes even with a small impact”

Governor Lee pointed out on the 15th at a briefing session on the direction of the BOK’s monetary policy, “Expansion of investment based on excessive leverage (debt) can cause losses that are difficult for investors to bear due to an unexpected shock.”

He added, “I always watch carefully for investments that cause great leverage,” he emphasized.

Regarding the controversy over the bubble (bubble) as the KOSPI recently exceeded 3000, Governor Lee said, “If you look at the stock price trend indicator, it is true that the recent pace is faster than before.” I am concerned,” he said.

Specifically, he pointed out that “if there is such an impact, such as a change in the easing stance of monetary policy in major countries, an unpredictable geopolitical risk in advance, or the prevalence of the corona 19 spread, the stock price could be sharply adjusted.” .

◆ “Household debt is not a step to worry about insolvent”

He also noted that the rise in asset prices is fast in light of the real economy and income conditions, and that borrowing is large in the process. In addition, it said that household loans increased significantly last year, but they were not at a level to worry about insolvency.

Governor Lee said, “As the rate of increase in housing prices and household loans increased significantly last year, we became compelled to be concerned about the risk of household insolvency,” he said. “Household debt cannot be resolved in a short period of time, so continuous management is necessary.”

He added, “In the process of responding to Corona 19, an increase in household debt was inevitable, but the delinquency rate is showing a low level as interest rates are lowered and loan rating maturity is prolonged.

Governor Lee also suggested that selective payment of the 4th disaster support fund is appropriate. He said, “In the situation where Corona 19 is prolonged, selective support is appropriate in order to efficiently use limited resources.”

Governor Lee said, “Considering the difficulties of the real economy, changing the interest rate policy stance is not a consideration at the moment.”

Governor Lee emphasized, “The pace of economic recovery depends on how much consumption recovers.”

The Bank of Korea Financial and Monetary Committee unanimously froze the base rate at 0.5% on this day.