Do you remember that last Tuesday was ‘Savings Day’? As there was an event for the day, I already updated Frank’s Diary to tell you what happened at FSC. Click this link, if you missed out the post! https://financialservicescommission.wordpress.com/2012/10/30/sketch-on-savings-day-are-you-a-regular-saver/
Well, we are willing to save more, but often challenged by some factors discouraging us to save. Those factors would include inflationary pressure, burdens of regular payment for insurance and pension, household debts, and the list goes on.
Then, how can we deal with this situation? Since it is not merely a matter of individual choice between consumption and saving, the issue should be seen in a broader scope. That is, the role of government is important to encourage a higher level of saving.
Above all, addressing the current issue of household debt is a primary ground to encourage more savings. FSC considers that household debt in Korea is at a manageable level, while acknowledging that there is still a possibility of risk. Against possible risks calling for additional policy measures, FSC is carefully monitoring the household debt issue. Once individual households are easing their debt burdens, saving level is expected to go up.
FSC is also thinking of more concrete measures. New financial products, such as ‘Net-Egg Saving’ and ‘Long-Term Fund’, will be introduced with benefits of tax exemption for those products. Financial companies will be encouraged to develop adequate financial products to promote development in capital markets and boost household savings.
This is not the end of FSC’s plan. As many households’ willingness to save is frustrated by bubbles in asset prices, FSC will regulate those bubbles. For example, FSC will monitor certain financial products whose prices are exceptionally soaring for a short-term. Additionally, provision of financial education will be improved by publishing appropriate contents for different age groups. Especially, the young and students are targeted for the enhanced education to help them build a sound and balanced pattern of consumption and saving.
As like any other issue, this issue of promoting more savings demands cooperation between the government and other financial entities. In this regard, FSC advises financial companies to be responsible for their given tasks. What are financial companies’ responsibilities in our financial system? This will be in the follow-up post!