President Lee: Claims That Debt Relief Causes Moral Hazard Are 'Irresponsible Agitation'

President Lee Jae-myung has dismissed claims that aggressive debt relief policies lead to moral hazard across society as "irresponsible agitation."

President Lee made the remarks this morning (July 15) during a policy briefing by the Financial Services Commission and other ministries held at the Yeongbingwan of the Blue House, stating, "It (aggressive debt relief) is not moral hazard."

He questioned the critics, asking, "Who would choose to become a credit delinquent over a few tens of millions of won, unable to find employment, open a bank account, rent a home, or live without being subject to asset seizure?"

"If we fail to do what is necessary because of criticism or agitation, what would happen to our society?" President Lee added. "In fact, it is the financial institutions' harsh management of long-term delinquent debtors that constitutes moral hazard."

His argument is that because the disadvantages of being a long-term delinquent are so severe, the likelihood of people intentionally avoiding debt repayment is low, and therefore, it is appropriate to help them escape debt through active relief policies.

President Lee emphasized, "If someone is in debt and lacks the ability to repay it, it is socially beneficial to allow for bankruptcy and discharge, and to give them a fresh start." He added, "We must provide relief quickly so that they can engage in normal economic activities, which in turn allows the economy to function properly."

"In developed countries, these processes are handled routinely, easily, and quickly, but it is too difficult in Korea," President Lee said. "We must ensure that people do not die or become isolated from society and unable to participate in economic activities due to debts they cannot repay, which ultimately results in losses for the entire community."
 
(Photo: Blue House Photo Press Corps, Yonhap News)
※ Please note: This article was translated by AI and may contain errors.