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Korea Household Debt Evokes 1997 Crisis, Says Ex-BOK Member

  • Nearly a third of debt held by distressed households
  • BOK faces dilemma with reasons to raise and cut rates, he says
Buildings are seen shrouded in smog in Seoul.

Buildings are seen shrouded in smog in Seoul.

Photographer: SeongJoon Cho/Bloomberg

The most vulnerable holders of more than $1 trillion in household debt could spark a financial crisis in South Korea that rivals the one seen during the Asian crisis two decades earlier, according to a former Bank of Korea monetary policy board member.

"It evokes memories of the late 1990s when Korea was bailed out by the International Monetary Fund," said Choi Woon Youl, now a lawmaker with the main opposition Democratic Party of Korea, during an interview with Bloomberg on Nov. 28. "If it was corporate debt that drove the crisis 20 years ago, it is household debt that would take the lead this time."