"Excessive liability has always triggered financial crises. The 1997 foreign exchange crisis, the 2002 credit card crisis, the 2011 savings bank crisis—all of these were fundamentally caused by unmanageable liability. Even now, household liability is being discussed as an issue. We need to be well aware of how dangerous liability can be."
Go Seung-beom, 63, chairman of the Youth Finance Education Council, said in an interview with ChosunBiz on the 17th that "financial crises destroy individuals' lives and cause national confusion." Go emphasized the need for financial education during adolescence by stating, "If each citizen does not cultivate proper financial knowledge, we cannot prevent financial crises caused by liability."
Go served as a member of the Monetary Policy Board of the Bank of Korea from 2016 to 2021, and as the 8th chairman of the Financial Services Commission from 2021 to 2022. He has dedicated more than half of his life to the design of domestic financial policy. He began his public service career in 1985 at the Ministry of Finance (the former name of the Ministry of Economy and Finance). He spent 37 years exclusively in finance, moving through the Financial Supervisory Commission, the Financial Services Commission, and the Bank of Korea, until stepping down as chairman.
Within the Financial Services Commission, many still remember him as the "household liability killer." Go was appointed as the chairman of the Financial Services Commission in August 2021 during the Moon Jae-in administration. At that time, household liability was skyrocketing amid the COVID-19 pandemic and a zero-interest rate environment. Household liability had increased by over 25 trillion won in just one month. Upon his appointment, Go took the lead in managing the total household loan volume and introducing regulations on the Debt Service Ratio (DSR). Some criticized him, saying, "The country is blocking bank loans," but Go steadfastly implemented his policies, enduring various external pressures. Over time, Go's resolve has been viewed as a prescient move, effectively preventing bigger issues.
Even after stepping down from public office and joining the Youth Finance Education Council, he consistently highlights the dangers of liability. He argues that to manage liability wisely, financial education should begin in elementary school. Go noted, "The adolescent period is when values and habits regarding money are formed, but most young people do not receive proper financial education." He recounted how he first realized the need for financial education during the credit card crisis, sharing his personal experiences.
—You mentioned that the credit card crisis prompted you to recognize the need for financial education.
"During the credit card crisis, I was the head of the Non-Bank Supervision Division at the Financial Supervisory Commission. As I looked into the causes while managing the crisis, I found that young people in the early 2000s had no fear of credit card debt. As a result, many young people struggled with credit defaults. That's when I keenly felt the necessity for financial education. If we were to assess our citizens' financial literacy out of 100 points, it would be slightly below 60. According to certification exam standards, that's a failing grade."
—You mentioned the importance of liability management. It seems crucial to instill a correct understanding of loans during adolescence.
"After the COVID-19 pandemic, phenomena like 'younggeul' (borrowing to the limit) and 'debt-funded investment' spread. A distorted view that sees loans solely as a means to increase assets has become widespread. Before it's too late, we must clearly teach young people the essence and responsibilities of loans. A loan is 'borrowing money from one's future self.' It is an act that entails responsibility, and this must be imparted clearly. Of course, loans can also be used to improve quality of life. We should not taboo loans outright, but instill both the positive and negative aspects in their minds."
—It is practically impossible for teenagers to experience the importance of liability management firsthand through loans. Is there an effective way to learn the concept of loans?
"The most effective place to teach the severity of loans is at home. Parents usually give their children regular allowances. Sometimes, children ask for more allowance when they run short. Simply taking cash out of your wallet or scolding them and sending them away is not the solution. How about lending them money instead? Tell your child, 'This money is a loan that you must repay later,' and make a pinky promise. They will learn how hard it is to repay debt. This naturally instills the recognition that money should only be borrowed when absolutely necessary."
—Investment, like loans, is an indispensable field in financial education.
"Proper investment is 'investment that adheres to the basics.' Most people gather seed money for investment through savings. Before investment education, it is important to develop a savings habit. Understanding the concept of investment and the characteristics of financial products is also necessary. Just as important as classroom learning is building investment experience with parents. Under parental guidance, experiencing profits and losses in stock investments helps. Whether you gain or lose money, you should study the reasons behind it. Such guidance helps children develop their own investment methods and principles."
—You said that 'proper investment is investment that adheres to the basics.'
"The fundamental principle of all investment is personal responsibility. Investment products inherently include the possibility of principal loss. One must understand that thoroughly. I've witnessed many large-scale investment losses and mis-selling incidents. Did financial companies completely neglect to explain the products to investors? No. However, the complicated and lengthy explanations were often not fully understood. What if elementary, middle, and high schools taught the basic principles of investment and taught students how to interpret investment products? Wouldn't it have been easier for investors to recognize the risks of the products?"
Over time, the spectrum of the interview widened. The conversation, which began with the need and methodology of youth financial education, gradually expanded to diagnosing and suggesting financial education policies. On the day Go was met, there was a financial education event held by the Financial Services Commission at another venue in the banking hall. On this day, the commission promised to support the activation of financial education within school curricula.
—From this year, a subject on 'Finance and Economic Life' has been introduced as an integrated option in high schools. This is the first time a subject dedicated solely to finance has been formally adopted into school curricula.
"I regard it as a significant milestone in the history of financial education. Many in the financial authorities have put in tireless effort over a long period. However, there are still some regrets. Since it's not a mandatory subject, many schools have yet to adopt it. Eight out of ten high schools nationwide have either not opened the course or placed it in the second semester of the third year. During the second semester of the third year, classrooms revolve around College Scholastic Ability Test preparation. There is no time to focus on finance. It is necessary to encourage placing the subjects on finance and economic life in the second year of high school."
—One of the major problems in our education environment is the infrastructure gap between the capital region and non-capital regions. I'm curious about the financial education environment.
"Looking at the Youth Finance Education Council's application status for 2023, schools in Seoul, Incheon, and Gyeonggi account for 73% of all applicant schools. Simply based on the number of elementary, middle, and high schools, schools in the capital region make up 45% of the total. The number of schools is greater in the provinces, but the demand for financial education is higher in the capital region. In our country, economic infrastructure is concentrated in the capital region. The high housing prices in the capital area increase residents' use of loans. This naturally leads to greater interest in finance overall. Various factors seem to be intricately intertwined, resulting in different levels of interest in financial education between the capital and provincial areas."
—Youth outside regular schooling cannot benefit from advancements in public financial education.
"Youth who are out of school or exiting protection facilities often find themselves in vulnerable economic situations. They are easily exposed to financial scams. The Youth Finance Education Council seeks out shelters and self-reliance support centers that can connect with them and provide life finance education. Currently, most of these are one-time educations. Long-term provision of customized education and one-on-one counseling is necessary."
—What are the main projects of the Youth Finance Education Council this year, and what are your goals for the remaining term?
"This year, the Youth Finance Education Council's main project is developing a program to learn finance through mathematics. Merely lengthening explanations while teaching financial principles makes it unengaging. The aim is to intuitively enhance students' understanding by linking it with the mathematics curriculum. My term ends next year, but I want to develop a financial education program taught in English next year. Creating financial education content in English will also assist College Scholastic Ability Test preparation, likely gaining interest from students and parents."
☞ Go Seung-beom, chairman of the Youth Finance Education Council
▲Bachelor's in Economics from Seoul National University ▲Master's in Public Administration from Seoul National University ▲Ph.D. in Economics from American University, USA ▲Senior Researcher at Sejong Law Firm ▲Senior Financial Specialist at the International Bank for Reconstruction and Development (IBRD) ▲Secretary-General of the Financial Services Commission ▲Standing Commissioner of the Financial Services Commission ▲Member of the Monetary Policy Board of the Bank of Korea ▲8th Chairman of the Financial Services Commission