It seems like I called the Financial Services Commission (FSC) official in charge of household debt policy almost every day right after the Lunar New Year holiday. Most of my questions were the same: "What follow-up measures are you planning regarding the president's posts on X (formerly Twitter) about multi-home owners (or speculative single-home owners)?"
At the time, President Lee Jae-myung was pouring out his thoughts on household lending practices on X. He opened fire on February 13 by asking, "Would it be fair to grant loan maturity extension benefits?" and then took direct aim at the lending problems of multi-home owners in a series of posts.
After the president stated on February 26 that he would "create conditions where selling is more advantageous than holding for speculative single-home owners," the financial authorities immediately began devising lending regulations targeting non-resident single-home owners. The president's posts on X became a direct guideline for household debt policy.
The financial authorities had originally planned to announce household debt management measures centered on expanding the scope of the Debt Service Ratio (DSR), sources said. However, as the president continuously called for financial regulations targeting multi-home owners, the direction of the measures appears to have shifted significantly. In fact, the household debt management plan that was expected to be released around the end of last month has still not been announced a full month later.
With the president having declared war on real estate speculation, it is in some ways a natural consequence that financial policy has been mobilized to the front lines. Yet in this process, the room for macroprudential policy itself to maneuver inevitably shrinks.
Macroprudential policy spans a wide range of areas, including smoothing economic fluctuations, responding to financial crises, and promoting productive finance. For example, if the prolonged Iran situation threatens to deliver a significant economic shock, authorities might need to allow some degree of leverage to cushion the downturn.
Internationally, there is growing consensus that prudential regulation has reached an inflection point. The United States recently announced measures easing capital requirements for large banks. The United Kingdom is also pursuing plans to rationalize regulations such as ring-fencing. On a different track, proposals such as introducing sectoral systemic risk capital buffers were discussed in the early days of the Lee Jae-myung administration, but those discussions have effectively stalled. One can only hope that macroprudential regulatory rationalization in a purer sense will find its way back onto the agenda.