The nation’s top financial regulator hinted Monday at the possibility of tightening loan regulations to curb snowballing household debts induced by the pandemic. 

The country’s household debts surged to a record 1.63 quadrillion won in the second quarter. 

“The government’s financial stimulus programs targeting small merchants as well as loan repayment moratoriums to counter the economic impact of the COVID-19 outbreak partly drove up household debts,” said Financial Services Commission Chairman Eun Sung-soo at a parliamentary audit session for the financial regulator.

“(The FSC) will closely monitor whether credit loans are used to purchase houses or stocks and, if necessary, regulatory moves to control lending would be implemented,” he said. 

He vowed to facilitate investment for the South Korean version of “New Deal” projects as well as digital transformation of the finance sector.

“As part of post-COVID-19 strategies, (the FSC) plans to issue a guideline for the New Deal Fund, which introduces 40 different investment areas, so that the fund can be operated as early as next year,” he said.

Earlier in September, the government unveiled the New Deal Fund aimed at financing its New Deal scheme -- infrastructure and environment-friendly policy initiatives designed to spur the local economy. The state-led fund to be worth 20 trillion won will invest in tech and green sectors, including 5G, artificial intelligence, renewable energy and hydrogen vehicles. 

Noting the market demand for faster digital transformation of the nation‘s financial industry, Eun said that the regulator would set up a legal framework to grant licenses to big data-driven service operators. The FSC will also reinforce measures for cyber security in partnership with other government agencies, he added.

By Choi Jae-hee (cjh@heraldcorp.com)