Kwon Dae-young, vice chair of the Financial Services Commission, addressed criticism that forgiving long-term delinquent debt could lead to moral hazard, saying it is a task to fill institutional gaps and correct bad practices to build an advanced financial system.
On the morning of the 20th, Vice Chair Kwon appeared on the YouTube program "Cheong Wa Dae Fact Mill" and said, "Because of the malicious behavior of a few, we must not turn away from and neglect the rest who are struggling. We need to level the playing field," and stated accordingly.
On the program, Vice Chair Kwon pushed back against criticism that the government's policy to forgive long-term delinquent debt causes resentment among diligent repayers and fuels moral hazard, saying long-term delinquent debt forgiveness is neither populism nor state-driven finance.
Vice Chair Kwon countered, "How common is it in reality for a repayer to hide assets and live for years as a credit delinquent?" noting that in such cases the person would have to accept disadvantages such as difficulty obtaining a credit card, opening a bank account, or activating a mobile phone.
He continued, "Because of a malicious few, we must not turn away from or neglect the 2% to 3% who are in hardship," and said, "Before people miss the timing trying to solve problems alone and fall into even greater difficulties, it is right for the government to support a fresh start."
He also said, "Of course we must block intentional and malicious behavior and support those who are truly struggling—that is a financial ecosystem fit for people and Korea's financial safety net," and pointed out, "Isn't it cruel to apply a rigid standard that says debts must be repaid unconditionally even when repayment is impossible due to force majeure?"
Regarding the criticism that debt adjustment undermines credit order and reduces lending, Vice Chair Kwon emphasized that when extending loans, creditors also commit to screening and management and receive interest in return, so it is common sense to share responsibility when problems arise.
He added, "Isn't it an exaggeration to link an extremely small part to the entire credit system?" and said, "Losing the soundness of a healthy community by turning away from a minority is a more serious problem." As for supplementary measures to prevent moral hazard, Vice Chair Kwon said the government will use thorough screening to identify only those who are in hardship with precision.