[2020 National Audit] Rep. Kim Du-kwan "Revision Needed for Bank of Korea Act Purpose Clause... Reflecting Changed Economic Environment"

[Asia Economy Reporter Kim Eun-byeol] Kim Du-gwan, a member of the National Assembly's Planning and Finance Committee from the Democratic Party of Korea, asserted on the 16th that "it is necessary to revise the purpose clause of the Bank of Korea Act in accordance with the changed economic environment."

On the same day, ahead of the Bank of Korea's audit, Rep. Kim pointed out that "central banks of various countries are playing an active role in defending the economy during economic crises," emphasizing the need to revise the purpose clause of the Bank of Korea Act to reflect current realities.

The purpose clause of the Bank of Korea Act in 1950 consisted of "stabilizing the value of currency for the development of the national economy," "promoting economic development and the efficient use of national resources," and "managing the nation's foreign settlement reserve funds." Among these, the item related to foreign settlement reserve funds was deleted in 1962, and only the remaining clauses were maintained until a full revision was made in 1997.

The current purpose clause of the Bank of Korea Act primarily stipulates the promotion of price stability through monetary and credit policies, with an additional provision that attention must be paid to financial stability when implementing these policies.

Rep. Kim stated that many committee members recently pointed out changes in the role of the Bank of Korea during the Planning and Finance Committee meeting, and he emphasized the need to revisit the purpose clause provisions in the Bank of Korea Act.

He stressed, "It is necessary to separate the purpose clause of the Bank of Korea Act, which runs parallel to the establishment clause, and explicitly include considerations for financial stability and economic stability alongside the promotion of price stability."

Meanwhile, Rep. Kim noted, "The experience of the novel coronavirus disease (COVID-19) pandemic has increased expectations that the role of the Bank of Korea should actively shift according to the changing times," and said that the Bank of Korea should expand its role to areas including financial stability, economic growth, employment increase, income distribution, and financial inclusion.

He argued that the Bank of Korea should promote the establishment of a support fund for vulnerable groups to strengthen its social functions. As a first step, he proposed a 'Small and Medium Enterprise Fund' jointly operated by the Bank of Korea, which would contribute large-scale funds, financial institutions, and credit guarantee institutions. By directly supporting research and development (R&D) funds for technology development, such as technology-based startup support and innovative SME support, over the long term, it can bring effects such as job creation and expansion of the economic growth base.

Following this, Rep. Kim proposed the establishment of a 'Vulnerable Household Stability Support Fund' aimed at resolving household debt problems among vulnerable groups with insufficient repayment capacity. This fund would operate by purchasing non-performing loans from financial institutions at a discount and supporting repayment through extended maturity or small installment methods. According to Rep. Kim, the establishment of this fund would induce solutions to household debt problems and is expected to contribute to income distribution and financial inclusion as well.

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