Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

S.Korea central bank sees worsening financial stability woes, debt repayment burden to rise

EconomySep 23, 2021 10:15PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: A woman wearing a plastic glove holds money as she stands in a queue to buy face masks at a post office, after a shortage of masks amid the rise in confirmed cases of the novel coronavirus disease COVID-19, in Daegu, South Korea, March 4, 2020

SEOUL (Reuters) - South Korea's central bank warned on Thursday that the debt repayment burden among vulnerable households could increase sharply as interest rates rise, underlining the growing negative impact of the debt binge in Asia's fourth largest economy.

Debt-to-disposable income at South Korean households was at 172.4% in the second quarter, up 10.1 percentage point from a year earlier, the BOK said in a regular report on financial stability.

The bank said the increase was a concern as household income for many dwindle amid social distancing curbs in place to fight COVID-19.

South Korea has put in place curbs including limited operating hours for cafes and restaurants and on the number of people allowed at social gatherings, hurting those in the hospitality sector.

"Funds concentrated into the asset market, as well as rapid home price increases, could bode ill for financial stability when market sentiment of economic entities rapidly change due to internal or external shocks," the report said.

The Bank of Korea raised its policy rate by 25 basis points to 0.75% in August, the first hike in almost three years and the first major Asian central bank to shift away from pandemic-era monetary stimulus.

Koreans have been borrowing more than ever before, and policymakers are increasingly worried the debt pile could become unsustainable as rates rise, hurting people's purchasing power and long-term growth.

Still, the report also said an additional 25-basis-point rate increase should only have a limited interest repayment impact on both households and businesses.

S.Korea central bank sees worsening financial stability woes, debt repayment burden to rise
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email