The index that reveals the vulnerability degree of South Korea’s monetary system has risen for 3 consecutive quarters, for the primary time for the reason that COVID-19 pandemic.
On Nov. 11, the Financial institution of Korea (BOK) introduced that the Monetary Vulnerability Index (FVI) for the third quarter of this 12 months was 32.9, up 1 level from the second quarter’s 31.9.
The index rose from 28.6 within the fourth quarter of final 12 months to 30.7 within the first quarter of this 12 months and has continued to rise for 3 consecutive quarters. That is the longest upward development for the reason that second quarter of 2020 to the third quarter of 2021, marking an increase for 5 consecutive quarters.
The BOK calculates the FVI every quarter by combining mid- to long-term indicators of monetary vulnerability comparable to credit score accumulation, asset costs, and the resilience of monetary establishments. The index typically tends to rise when family and company debt will increase and actual property or different asset costs go up.
The ratio of family debt to nominal gross home product (GDP) in South Korea stood at 89.7 % on the finish of the second quarter this 12 months, up 0.3 share factors from 89.4 % on the finish of the primary quarter.
The soundness indicators of monetary establishments additionally deteriorated. The whole quantity of “precautionary loans,” which represents loans delinquent for one to a few months, held by the 4 main monetary holding corporations — KB, Shinhan, Hana, and Woori — reached 18.35 trillion gained (roughly $12.54 billion) on the finish of the third quarter, the best degree on file. Their “substandard or decrease loans,” or delinquent for greater than three months, amounted to 9.27 trillion gained, representing a rise of almost 20 % from a 12 months earlier.
