In fear of another round of bad debt hike almost 10 years after the 2002 credit card crisis, regulators in Korea have started to closely monitor the performance of credit card issuers.
With analysts warning of another bubble unless consumers exercise some restraint, the government has chosen to focus on the credit card issuers rather than the holders. As part of the household debt plan, the regulators will make weekly checks on the asset size and marketing costs of all credit card firms.
The warning signs are clear: Koreans’ household expenditure has been rising faster than income for an extended period of time. The ratio of money Koreans save relative to their disposable income dropped to one of the lowest levels in the world at 2.8% last year from 24.7% in 1988.
With gloomy economic outlooks of the worldwide economy, people should not be surprised if regulators in more countries follow suit.