BOK Warns Against Debt Period Bomb
06 January, 2021
Lender of Korea Governor Lee Ju-yeol on Monday warned that the Korean industry could possibly be "heavily shaken by even a tiny shock" due to heavy fiscal and home debt.
In a New Year's address to top bankers, Lee explained ample liquidity supply and interest rollovers could create risks this season and that the government and banks have to maintain a "higher level of vigilance."
Exclusive spending continues to shrink, as the stock market keeps soaring to abnormal heights. Plenty of liquidity is moving into the currency markets as ultra-low interest levels lead to mounting housing loans, while fiscal debt could finish up becoming impossible to control, he warned.
An electronic panel at KEB Hana Lender headquarters in Seoul displays the Korea Composite Inventory Price Index at 3,027.16 things during intra-moment trading on Wednesday. /Yonhap
On Wednesday morning hours, the Korea Composite Stock Index surged to 3,027.16 points immediately after it opened, surpassing the uncharted 3,000-level level for the first time. The Kosdaq is about to surpass 1,000 tips.
Most of the funds that flowed in to the stock market was borrowed. As of the third quarter of this past year, Korea's home, corporate and government personal debt totaled W4.9 quadrillion (US$1=W1,090).
Home debt outpaced the country's GDP for the first time ever this past year as more persons borrowed money to tide them above the coronavirus epidemic or rushed to get homes.
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