Financial companies saw their number of delinquent customers increase by nearly 200,000 this year as more people struggle to repay debt amid the alarming deterioration of family finances, The Korea Times reported. The default rates for households approved by commercial banks have surpassed the level shown during recent financial crises, and an increasing number of small- and medium-sized companies are sinking under a sea of red, industry figures show.

Financial authorities have vowed to throw everything they have at the country’s consumer debt mountain, which now threatens to outstrip an entire year’s gross domestic product (GDP). But to the majority of observers, it appears the officials are doing nothing at all, if not actually making things worse, The Korea Times reported. It was two months ago when the Financial Services Commission (FSC) announced a fresh set of measures to tackle the increasing problem of personal indebtedness, aimed at assisting households in repaying loans and suppressing irresponsible lending by banks.

Korea’s increasingly toxic housing market is now threatening to wipe out the cream of the crop in its construction industry, a private think-tank claims. High on the endangered list are builders like Daewoo, Lotte, Ssangyong, Halla, Kolon and Keangnam, The Korea Times reported.

If our world has any place that acts like a financial early warning system, it’s South Korea. With high short-term debt levels and little to cushion it from destabilizing global events, Korea is often the first of the top 15 economies to zig, zag or hit an economic wall. At the moment, events on the ground suggest that Asia is fast running into trouble, Bloomberg reported. Korea was probably hit harder by Standard & Poor’s cut of the U.S.’s AAA credit rating than the U.S. Markets in Korea plunged, capital fled and credit-default swaps protecting public debt soared as U.S.

Korean policymakers are at a loss. For seven months they chucked everything plus the kitchen sink at the beast of inflation, only to be kicked in the teeth by alarming consumer price index (CPI) figures that underscored the futility of their efforts, The Korea Times reported. Breathing heavily on the ropes, government officials are desperately scrambling for more options to fight back against higher prices. But it’s unclear whether there is anything left to do when their actions are beginning to test the limits of political and economic acceptability.

The Bank of Korea (BOK) kept the country’s policy rate unchanged at 3.25 percent despite high inflation, as the heightened uncertainty surrounding European financial troubles dissuaded rate setters from hiking, The Korea Times reported. The decision by the central bank’s monetary policy committee Thursday had been widely expected and BOK Governor Kim Choong-soo warned against raising interest rates too quickly, insisting that the country has already suffered the worst of the inflationary pressures.

In their recent plan to tackle high levels of household debt, South Korea’s regulators included steps to prevent overspending using credit cards. For good reason, The Wall Street Journal Real Time Korea blog reported. South Koreans are particularly fond of plastic money, with almost one million credit cards issued each month in this nation of around 48 million people, and every economically active Korean holding on average 4.8 cards. That’s up from 4.3 in 2002, when excessive borrowing using credit cards caused a lending bubble.

Korea will come up with tighter lending regulations on banks to try and rein in household debt, the head of the nation’s financial watchdog said Thursday, The Korea Times reported. “The financial watchdog will seek to stem excessive growth of household debt and make efforts to amend its structure to soften the impacts of rate hikes,” Financial Supervisory Service (FSS) Governor Kwon Hyouk-se said in a forum held at the National Assembly.

Credit card companies’ aggressive push for asset growth through loan services is feared to pose a threat to the nation’s already-high household debt, The Korea Times reported in a commentary. Given that a significant portion of the fast-rising amount of loans may go sour, the financial authorities fear that they will add to already-mounting household debts. According to the Bank of Korea (BOK), the problem can no longer be ignored as household debt surpassed 800 trillion won for the first time in the first quarter. It rose 6 trillion won from the previous quarter.

The next couple of months will be crucial for the future of troubled savings banks, The Korea Times reported. One problem after another has beset the sector and jeopardized the entire financial industry. But there is little guarantee that all the problems have been exposed. Chances are that there may be more and, if this proves true, it is likely that they will surface by August. The impact may renew the sense of crisis within the financial sector, depending on the seriousness of any problems that are uncovered.