[2020 National Audit] Head of KIPF: "Controversial Report Was Not Negative About Local Currency"

Attendance as a National Assembly Audit Witness... "The Most Important Conclusion Is to Fairly Distribute the Concentrated Benefits"

[Image source=Yonhap News]

[Sejong=Asia Economy Reporter Kim Hyun-jung] Kim Yoo-chan, President of the Korea Institute of Public Finance, made remarks clarifying that the institute's report pointing out the adverse effects of local currency does not conclude that local currency itself is negative.

On the 7th, at the Ministry of Economy and Finance’s National Assembly audit held at the Government Complex Sejong, Kim, who appeared as a reference witness, responded to Democratic Party lawmaker Ko Yong-jin’s comment that "the KIPF report is negative about local currency" by saying, "I do not think it was negative. The report stated that if all local governments introduce it, the effects could offset each other."

Last month, the Korea Institute of Public Finance pointed out in its "Impact of the Introduction of Local Currency on the Local Economy" report published in the Tax and Finance Brief that local currencies, which can only be used in specific regions, cause various losses and costs, resulting in adverse effects. In response, Lee Jae-myung, Governor of Gyeonggi Province, who has actively promoted the introduction of local currency and its positive effects, strongly criticized the report, calling it a "vestige to be eliminated."

Regarding the related report, Kim emphasized, "According to empirical analysis, there was a sales increase effect in important industries, but no statistically significant effect was observed in other industries," adding, "The implication is that the system should be reformed through institutional supplementation so that benefits can be evenly distributed across various small business sectors." He also said, "It is true that economic terms such as deadweight loss (surplus lost due to price or tax interventions in competitive markets) or cost generation were used to describe some secondary negative opinions," and added, "I think there may have been aspects where the expression was somewhat strong."

Kim stressed, "The most important conclusion is to evenly distribute the benefits that are concentrated in certain industries," and said, "Although the use of Onnuri gift certificates was suggested as an alternative, I do not think it is sufficient. It is an issue that requires cooperation to find solutions together."

He also revealed that they are reviewing the possibility of issuing a final report on local currency reflecting new opinions or criticisms. He explained, "The final report on local currency is being reconsidered at the final stage because the issue has attracted a lot of social attention and there are new opinions or criticisms, so we are looking into whether such content can be reflected."

In response to Democratic Party lawmaker Woo Won-shik’s criticism that "it is highly inappropriate for a national research institute to have such a perspective," Kim rebutted, "It is difficult to consider all aspects of local currency and produce research results. If that were the case, researchers would not be able to conduct proper research due to pressure." He added, "Individual researchers provide research results with logical consistency, and policymakers can utilize them. We have contributed partially, so we ask that this be taken into account."

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