BOK chief pledges to build economic resilience to counter pandemic

The chief of South Korea’s central bank on Friday vowed all-out efforts to speed up the country’s economic recovery amid the prolonged coronavirus pandemic, raising the possibility of further monetary easing policies. 

In a speech to celebrate the 70th anniversary of the central bank’s founding, Bank of Korea Gov. Lee Ju-yeol said monetary easing policies needed to be implemented until signs of an economic recovery appear. 

To prompt credit flows in local financial markets, the BOK would review policy tools other than interest rate cuts, Lee added. 

Earlier, the central bank slashed its key rate to a historic low of 0.5 percent from 0.75 percent in a bid to help Asia’s fourth-largest economy weather the economic fallout from the pandemic. In addition, it implemented quantitative easing measures, signing a $60 billion currency swap deal with the United States and injecting some $20 billion into local financial markets so far. 

Lee also mentioned the need for a social consensus over how much the central bank should intervene in the market in times of economic crisis. 

“Some describe the central bank as a ‘crisis fighter,’ calling for it (to play an) active role in stabilizing local financial markets shaken by the novel coronavirus outbreak. There is a need to decide how much of an influence on the country’s fiscal policies the BOK should exercise,” he said. 

Citing factors that could trigger deflation in the post-COVID-19 era, such as sagging consumer demand and a tendency for people to hold onto their savings, the top monetary policymaker vowed to keep a close watch on his foreign counterparts’ measures to ensure price stability. 

Meanwhile, the BOK chief promised to shore up research and development toward a central bank digital currency to support a digital transformation in the finance sector. 

The Bank of Korea was established June 12, 1950, under the Bank of Korea Act, for the primary purpose of protecting price stability in cooperation with the government.

By Choi Jae-hee (cjh@heraldcorp.com)