S. Korea's financial regulator to form task force on high household debt

21:10, January 12, 2011      

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South Korea's top financial watchdog said Wednesday it will create a task force to cope with high household debt, a potential threat to the country's economic recovery.

The task force will be set up as early as March to address the rise in household loans and take comprehensive measures to stifle the growth of household borrowing, the Financial Services Commission (FSC) said at a press briefing.

Household debt, which as of last December totaled 430.4 trillion won (384 billion U.S. dollars), remains at a relatively higher level considering South Korea's economic size despite efforts to curb the rapid surge, the FSC said.

The high level of household borrowing can lead to a drop in household savings and hurt economic growth potential, the regulator said, which might adversely affect households and financial companies when coupled with a possible interest rate hike or a slump in the housing market.

A set of measures being mulled include assessing the size and the growth rate of household borrowing, improving soundness of bank lending to households and improving households' ability to pay back debt, according to the regulator.

The FSC will seek to revise related laws in the second half of this year, it said.

Source: Xinhua

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