FSB Secretary-General Praises Bank of Korea for Considering Financial Stability Amid Housing Prices and Household Debt

2024 World Economy and Financial Stability Conference
John Schindler, Secretary General of the Financial Stability Board (FSB)

John Schindler, Secretary General of the Financial Stability Board (FSB), stated, "I highly appreciate that the Bank of Korea is considering financial stability issues such as real estate and household debt," and added, "Having a high level of debt is not a problem unique to Korea but an issue faced by countries worldwide."

At a press conference for the '2024 Global Economy and Financial Stability' conference held on the 4th at the Plaza Hotel in Jung-gu, Seoul, Secretary General Schindler responded to a question about the increasing ratio of household debt to Korea's Gross Domestic Product (GDP).

He said, "As long as repayments continue to be made regarding household debt issues, it is not a problem, but if economic cycles fluctuate and repayment difficulties arise, then it becomes a problem," adding, "In such situations, it is important to know who the creditors of the debt are."

He continued, "If the loans were taken from banks, it is important whether the banks have sufficiently strengthened their capital, and if from other financial institutions, whether policies are in place to prepare for lower repayment rates," adding, "From a macroeconomic perspective, whether a recession is approaching is also a crucial factor."

He also stated, "Having a high level of debt is not a problem unique to Korea but an issue faced by countries worldwide."

Secretary General Schindler also expressed concerns about the political and economic fragmentation of the world. He said, "The strength of the FSB lies in having diverse members such as central banks, regulatory authorities, finance ministries, and international organizations, and the ability to efficiently reach agreements among them," but added, "However, if fragmentation progresses, it may become difficult to reach agreements among various institutions."

He further added, "Even if agreements are reached among all member countries, implementation across all countries worldwide is required, which could also become difficult."