New BOK Monetary Policy Committee Members Include Senior Government Figures... First Reappointment Case (Comprehensive)

Jo Yoon-je, Seo Young-kyung, and Joo Sang-young Recommend... Go Seung-beom's Reappointment

[Image source=Yonhap News]

Four new candidates for the Financial Monetary Policy Committee (FOMC) of the Bank of Korea, which will lead the rapidly changing economy due to the novel coronavirus infection (COVID-19), have been announced. Heavyweights from the current administration and progressive economists have been recommended as FOMC candidates, signaling significant changes in the future dynamics of the Bank of Korea's FOMC. Attention is focused on how the committee members will assess the central bank's role as the 'lender of last resort' in times of crisis and the real estate market. For the first time, a Bank of Korea FOMC member has been reappointed.

◆ Jo Yoon-je, Seo Young-kyung, Joo Sang-young... Ko Seung-beom reappointed = On the 16th, the Bank of Korea announced that former Ambassador to the U.S. Jo Yoon-je, Seo Young-kyung, head of the Korea Chamber of Commerce and Industry's Sustainability Growth Initiative (SGI), and Joo Sang-young, professor of economics at Konkuk University, were recommended as new members. Current FOMC member Ko Seung-beom was recommended for reappointment. The Bank of Korea's FOMC, which decides the base interest rate, consists of seven members, and the terms of four members expire on the 20th.

Jo, recommended by the Ministry of Economy and Finance, was known as President Moon Jae-in's economic 'tutor.' During the 19th presidential election, he served as the head of Moon Jae-in's think tank, 'Policy Space for National Growth,' and worked as an economic analyst at the International Monetary Fund (IMF). He served as the first ambassador to the U.S. under the current administration and was even mentioned as a candidate for the Bank of Korea governor, making him a 'heavyweight' figure likely to hold a casting vote in future FOMC decisions.

Member Ko is the first in the Bank of Korea's history to be reappointed. The Bank of Korea stated, "There were many concerns that replacing the majority of FOMC members at once could undermine the continuity of monetary policy, especially as the FOMC is currently preparing various policies to overcome COVID-19, making policy continuity crucial at this time." Professor Joo, who serves as the head of the macroeconomic division of the National Economic Advisory Council, was also recommended as a new FOMC member. Professor Joo is considered a representative progressive professor who has expressed opinions on how to effectively implement income-led growth. Seo, a Bank of Korea alumnus, was also recommended, resulting in the FOMC having two female members for the first time in history.

◆ Numerous challenges in responding to COVID-19... Securities firm loans decision possibly today = The new members face numerous challenges to resolve. Whether to further lower the base interest rate, which is at a historic low of 0.75% per annum, is a key issue. The main point of interest is whether the new FOMC members will agree to lower the base rate to the effective lower bound (around 0.5%). Attention is also focused on the Bank of Korea's contingency plan to respond to COVID-19. The Bank is currently considering purchasing corporate bonds through a special purpose vehicle (SPV). However, under the principle that the central bank should not incur losses, government guarantees are necessary, and with the general election over, discussions on the Bank of Korea's corporate bond purchases backed by government guarantees may take place in the National Assembly.

The plan to provide loans to securities firms using corporate bonds as collateral is expected to be finalized by the existing FOMC. The FOMC plans to hold an emergency meeting as early as this afternoon to decide on the securities firm loan plan. If the COVID-19 situation is resolved and the economy normalizes in the first half of this year, how to restore the base interest rate to its original level without side effects will also be a challenge for the FOMC.

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