Lee Changyong: "Loan Volume Regulations for Real Estate Are Necessary... Easing Concentration in the Seoul Metropolitan Area Is Also Needed"

Bank of Korea Reports to National Assembly Fiscal and Economic Committee
Need for a Macroprudential Management Committee

Lee Changyong, Governor of the Bank of Korea, stressed on the 23rd that loan volume regulations should be strengthened in relation to real estate stabilization measures. He also said that the government’s policy direction of easing concentration in the Seoul metropolitan area, including relocating government bodies and public institutions, is "necessary."

Governor Lee made these remarks in response to questions about the effectiveness of the government’s real estate policies during a work report to the National Assembly’s Fiscal and Economic Planning Committee on the afternoon of the same day.

When Oh Kiheung, a lawmaker from the Democratic Party of Korea, asked about household debt management, Governor Lee replied, "At this point, changing just one thing overall will not solve the problem; everything has to change across the board," adding, "In particular, although real estate loan volume regulations have been subject to a lot of criticism, I believe they are necessary. It is also necessary to strengthen regulations on the debt service ratio (DSR)."

He went on to emphasize, "In addition to the government, it is essential to have a macroprudential management committee (a consultative body) through which the Bank of Korea can provide objective input."

In response to a question from Cha Kyugeun, a lawmaker from the Cho Kuk Innovation Party, about the impact of the expiration of the temporary suspension of the heavy capital gains tax on multi-homeowners, Governor Lee said, "In the short term, I can say that it has an effect, but in the long term it is difficult for anyone to predict whether it will produce better results. It does not depend only on that short-term real estate policy," explaining that "this is because the concentration in the Seoul metropolitan area ultimately has to be eased."

He added, "Regardless of government policy, the Bank of Korea believes that household debt, especially real estate loans, is too serious a problem and a source of instability for the national economy, and therefore must be reduced," and continued, "Whether for multi-homeowners or single-homeowners, I have long said that in terms of tax issues, these are policies that need to be improved from the perspective of fairness in the tax system."

On the issue of relocating judicial institutions such as the Supreme Court and the Constitutional Court to regional areas to ease concentration in the Seoul metropolitan area, he said, "If I speak in detail, it would be my personal opinion," but noted that "in broad terms, I agree with the idea."

Lee Changyong, Governor of the Bank of Korea, is attending the plenary meeting of the National Assembly's Committee on Finance and Economic Planning held on the 23rd and responding to lawmakers' questions. Yonhap News