Kwon Minsu, New Vice Governor of Bank of Korea, Stresses Need for Prudent and Flexible Monetary Policy

"Exchange Rate Has Fallen, But We Cannot Ignore It Completely"

"I do not wish to be labeled as a hawk or a dove. I will make decisions flexibly based on the data."

Kwon Minsu, Deputy Governor of the Bank of Korea, is delivering an inaugural speech at the inauguration ceremony held on the 21st at the Bank of Korea in Jung-gu, Seoul. Photo by the Bank of Korea

Kwon Minsu, the new Vice Governor of the Bank of Korea, told reporters after his inauguration ceremony at the Bank of Korea on the 21st that "this is a time when prudent and flexible policy judgment is needed."

Vice Governor Kwon will participate as an ex officio member of the Monetary Policy Board starting from the meeting on the 27th, where the direction of monetary policy and the benchmark interest rate will be determined.

When asked about the most important factors to consider at the upcoming Monetary Policy Board meeting, he said, "We need to take into account growth trends, inflation, financial stability, as well as the policy effects and side effects resulting from an interest rate hike. Rather than focusing on a single aspect, I believe this is a time when policy decisions must be made with balance and prudence, while still maintaining flexibility when necessary."

Regarding a question about whether the recent downward stabilization of the KRW-USD exchange rate would reduce its impact on monetary policy, he replied, "The recent movements were influenced by strong equities and a large current account surplus, but short-term flows dominated, so developments did not unfold as expected. Fundamentally, however, I believe the direction is downward." He added, "Given the many external variables such as the stock market and the Middle East situation, conditions could change, so we cannot ignore the exchange rate entirely. All elements must be weighed and considered in a balanced manner."

On the policy of internationalizing the Korean won, he commented, "We are taking significant steps one at a time." He continued, "A major task remaining ahead is to ensure that, with the pilot operation of the offshore settlement system starting in September, the won can be used smoothly for settlements overseas. Another task is to expand the 24-hour foreign exchange market to increase trading volume and deepen and broaden the market. This is where I plan to focus my efforts."

Vice Governor Kwon added, "The recent volatility in the equities and foreign exchange markets has been relatively minor compared to the size of the Korean economy and the performance of major companies such as Samsung Electronics and SK hynix. This is why I consider growing the market an important task, and the first challenge is internationalizing the won."

He also stated that the Bank of Korea will continue its efforts to be included in the MSCI (Morgan Stanley Capital International) index. Vice Governor Kwon remarked, "There were significant institutional improvements made during the process of being included in the World Government Bond Index (WGBI), so now it is important to make the market feel these changes. We must work even harder and achieve tangible results in the second half of this year or early next year," he said.

This content was produced with the assistance of AI translation services.