Outgoing Bank of Korea Governor Rhee Chang-yong emphasized Monday the increasing difficulty of achieving economic stability and sustainable growth solely through conventional monetary and fiscal policies. He advocated for an expanded role for the central bank in tackling South Korea’s pressing long-term structural challenges.
Governor Rhee delivered these remarks during his farewell ceremony in Seoul, marking the completion of his four-year term. His successor, Governor-designate Shin Hyun-song, is anticipated to commence his term on Tuesday, pending parliamentary approval later today.
“Despite the diminishing effectiveness of traditional monetary and fiscal policies in fostering economic stability and growth amidst profound structural shifts, public expectations for policymakers remain elevated due to historical achievements, thereby broadening the disparity between capability and demand,” Rhee noted.
He further elaborated, highlighting that while South Korea’s recent economic and foreign exchange conditions have shown relative stability, largely attributed to the robust semiconductor industry, this positive outlook is tempered by concerns. It underscores deepening structural issues, including an over-reliance on particular sectors and the subsequent economic polarization.
Emphasizing that comprehensive structural reform is a continuous imperative, Governor Rhee urged the Bank of Korea to transcend its conventional role in monetary and financial policy. He envisions the BOK evolving into “the nation’s leading think tank,” actively contributing solutions to critical structural challenges such as education reform, housing accessibility, balanced regional development, enhancing youth employment, and addressing elderly poverty.
Reflecting on his impactful four-year tenure, Rhee highlighted the Bank of Korea’s pivotal role in navigating unexpected economic shocks. He proudly cited key accomplishments, including successfully curbing inflation to the 2 percent target, achieving this milestone sooner than many other major central banks. Other achievements include pioneering a unique Korea-style forward guidance, chairing the prestigious Bank for International Settlements Committee on the Global Financial System, and publishing over 20 influential reports on structural reform.
Concluding his remarks, Rhee stated, “Public trust in a central bank is fundamentally built upon its competence.” He encouraged the BOK staff, adding, “I urge you not to become complacent. Instead, strive to set even higher goals and achieve even greater progress for South Korea’s economic future.”
