[Column] The Bank of Korea's Concerns Regarding the Presidential Election

[Asia Economy Reporter Jang Sehee] "Honestly, I am worried that the Bank of Korea might be mentioned in relation to next year's presidential election."

A recent Bank of Korea official expressed concern rather than expectation when referring to the upcoming presidential election. It was somewhat refreshing that the politically neutral and independent Bank of Korea would comment on the election itself.

The Bank of Korea's concern lies in the 'issuance power.' There is an underlying worry that there could be pledges to go beyond borrowing and simply print money to inject into the economy.

This concern is not unfounded. Recently, the ruling party's presidential candidate camp has begun emphasizing the central bank's role in 'expansionary fiscal policy' by mentioning issuance power. A camp official stated, "Basically, the source of money injection is the central bank," adding, "From the perspective of defense capability and funding costs, it is better for the government to do it rather than households." This implies an intention to mobilize the central bank's issuance power for populist money printing.

In particular, the ruling party's presidential candidate is pressuring the government to provide nationwide disaster relief funds in next year's budget. There is no guarantee that the Bank of Korea's issuance power will not be mobilized in reality.

As is well known, policies that involve printing money have significant drawbacks. If the money supply continuously increases, the risk of inflation also grows. Currently, the consumer price inflation rate has reached 3%, and national debt is projected to soar to 2,000 trillion won in eight years, signaling red flags in the macroeconomy. If the money supply increases while the real economy remains unchanged, it could damage external credibility and lead to the withdrawal of foreign investment funds.

That is not all. Members of the ruling party argue that the central bank needs to actively stimulate the economy through monetary policy and propose adding 'employment stability' to the Bank of Korea's founding purpose clause. Political judgment is prioritized, and the central bank's independence is completely disregarded.

A Bank of Korea official said, "If issuance power is mobilized, wouldn't the governor oppose it even at the risk of resigning?" In the next government, there should be no situation where even the Bank of Korea governor has to risk their position.

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