Seungbeom Go "A Breakwater Role Preventing National Economic Crisis Beyond Personal" [Essential! Financial Education]⑨

"Excessive Debt and Credit Create Economic Crisis"
Financial Education Contributes Not Only to Investment Decisions but Also to the National Economy

"Our citizens become adults without learning basic financial knowledge due to education focused on college entrance exams. They don't even know the difference between savings and installment savings, and end up facing difficulties by taking excessive loans for investments such as 'debt investment' (bijtu) or 'all-in borrowing' (yeongkkeul). Financial education is essential not only to develop fundamental financial competencies but also to ensure the stability of the financial system."

Go Seung-beom, former 8th Chairman of the Financial Services Commission and Chairman of the Youth Financial Education Council, said in an interview with this publication on the 19th of last month that financial education plays a role not only in individual economic independence and stability but also in preventing economic crises.

Ko Seung-beom, Chairman of the Youth Financial Education Council, is being interviewed by Asia Economy at his office in the Bankers' Hall in Myeongdong, Seoul. Photo by Heo Young-han

"Financial Education is Necessary to Prevent Financial Crises"

During moments when the Korean economy was in crisis, Chairman Go played a role in resolving issues at relevant government departments. He served as the General Secretary of the Economic Policy Bureau at the Ministry of Finance and Economy (now Ministry of Economy and Finance) during the 1997 foreign exchange crisis. During the 2003 credit card crisis, when reckless issuance of credit cards pushed card companies to the brink of bankruptcy and mass defaults occurred, he was the Credit Card Manager at the Financial Supervisory Commission (now Financial Services Commission). In the 2011 savings bank crisis, he served as Director of the Financial Services Bureau at the Financial Services Commission.

Chairman Go viewed excessive debt and credit as causes of economic crises. Citing examples from the three major bubbles in modern financial history?the Dutch Tulip Bubble, the British South Sea Company Bubble, and the French Mississippi Speculation Bubble?as well as modern cases like the U.S. dot-com bubble and Japan's bubble economy, he said, "The typical process of a financial crisis is that excessive credit problems lead to credit crunches and rapid economic contraction." He added, "Financial stability is essential to prevent excessive debt or credit from occurring. When individuals recklessly borrow to invest or take excessive loans to invest in real estate, a crisis leads to personal bankruptcies and the entire national economy suffers."

Chairman Go emphasized the need for financial education to prevent such crises. He explained that financial consumers need to develop their own criteria to assess risks when investing in virtual assets, stocks, real estate, and other personal investments, which can lay the foundation for financial stability. He said, "People with high financial literacy develop crisis response abilities that help them withstand shocks affecting their income and assets," adding, "Even when facing economic difficulties, they have the capability to overcome them." He continued, "The subprime crisis that triggered the 2008 global financial crisis was exacerbated by low financial capabilities among consumers. Countries like the U.S. and the U.K. analyzed that this lack of capability led to a surge in household debt and personal bankruptcies, prompting them to strengthen financial education."

He also noted that through financial education, better understanding of the risks and structures of financial products can help prevent issues like the incomplete sales problems seen in the Hong Kong H-Share Index (HSCEI) equity-linked securities (ELS) incident. Having the ability to accurately understand the relationship between returns and risks, as well as potential losses, aids in making better decisions. Furthermore, when receiving specialized education for investments such as derivatives, having a foundation of basic financial education enables sound judgment.

Ko Seung-beom, Chairman of the Youth Financial Education Council, is being interviewed by Asia Economy at his office in the Bankers' Hall in Myeongdong, Seoul. Photo by Heo Young-han

Established Following the Credit Card Crisis, the Youth Financial Education Council... "We Will Utilize Private Sector Know-How"

After serving as Chairman of the Financial Services Commission, Chairman Go took on the role of Chairman of the Youth Financial Education Council. The Council is Korea's first private-led financial education organization, established after the 2003 credit card crisis. Chairman Go's interest in financial education began during the 2003 credit card crisis. He recalled, "At that time, policies to promote credit card use to boost domestic consumption were implemented, leading to rampant issuance of credit cards even to those unqualified for credit." He emphasized the importance of youth financial education as many teenagers became credit delinquents, saying, "It was created from the idea that basic financial education is necessary to understand how dangerous excessive debt can be."

He gave a positive evaluation of the introduction of the new high school subject "Finance and Economic Life" starting next year, marking the beginning of formal financial education in public education. While emphasizing the fundamental importance of school education in the public sector, he also stressed the importance of private financial education. Chairman Go said, "Providing practical and broad financial education to all students regardless of their personal backgrounds and environments is the most effective approach," adding, "Practical financial education such as visits to financial companies or experiential learning is also necessary, and the private sector can take responsibility for these parts."

For example, the Youth Financial Education Council is conducting a "Global Financial Experience" program in collaboration with Hana Bank. Students visit Hana Bank to meet foreign exchange dealers, learn counterfeit currency detection methods, and experience bank teller roles through hands-on learning. Additionally, providing tailored financial education to vulnerable groups such as children in rural areas, immigrant families, North Korean defectors, at-risk youth, and single mothers is something private organizations can do. The Council operates a "Financial Camp" program in partnership with Meritz Fire & Marine Insurance, where children from rural areas visit insurance and banking centers.