Departing Governor Lee Changyong of the Bank of Korea: "Structural Reform Is Ongoing... Become the Nation's Top Think Tank"

At the Farewell Ceremony on the 20th, Stressed: "Monetary Policy Boundaries Must Be Surpassed"

Research Must Continue to Address Issues Like Education and Housing


Proud of Rapidly Returning Inflation to Target Level

Achievement: L

The departing Governor Lee Chang-yong’s final request to the Bank of Korea was, “Go beyond the boundaries of monetary and financial policy and become the nation’s top think tank.”

During his farewell ceremony held at the annex of the Bank of Korea in Jung-gu, Seoul, on the morning of April 20, Lee remarked, “I emphasized in my inaugural address four years ago that structural reform is essential, even to ensure the effectiveness of monetary policy.” He continued, “Structural reform is an ongoing process,” stressing, “Please continue to research and address the medium- to long-term tasks required to solve the structural issues facing our economy, such as education, housing, balanced regional development, youth employment, and elderly poverty.”

Lee Chang-yong, Governor of the Bank of Korea, is answering questions from the press during the monetary policy direction press briefing held at the Bank of Korea in Jung-gu, Seoul on the 10th. Photo by Joint Press Corps

"Structural Reform Is Ongoing" - The Bank of Korea Must Go Beyond the Boundaries of Monetary Policy

Lee stated, “What I realized again while managing various crises over the past four years is that it is becoming increasingly difficult to achieve economic stability and growth with only monetary and fiscal policy.” He pointed out, “Even as changes in our economic structure are weakening the influence of monetary and fiscal policy, public expectations for policymakers remain high due to past successes, widening the gap between expectations and reality.”

He cited the example of how the foreign exchange market, which was once heavily dependent on foreign investor capital flows, is now also significantly influenced by domestic entities such as corporations, individuals, and the National Pension Service. Outbound investments by Korean residents now fluctuate greatly, not only due to interest rate differentials but also because of a variety of factors such as the labor market, tax policy, the pension system, and global geopolitical risks. Lee emphasized, “If we attempt to manage the exchange rate solely through foreign exchange interventions or interest rate policies without institutional efforts to improve these realities, it could lead to greater side effects.”

He explained that the issues of low birth rates and low growth also require adjustments of interests and conflicts through structural reforms in labor and education, rather than short-term remedies like monetary or fiscal policy. He also suggested that it is necessary to re-examine the industrial structure. Lee noted, “It is fortunate that the recent boom in semiconductors has allowed the economy and foreign exchange market to be managed stably to some extent.” However, he pointed out, “At the same time, this also demonstrates that the structural problem of excessive dependence on a particular industry and resulting polarization is actually worsening, so it cannot be viewed entirely positively.”

"Evaluations of Policy Will Naturally Be Made Over Time"

Lee reflected, “Looking back, there have been no small number of rewarding moments,” adding, “I believe evaluations of the policies pursued during my term will naturally be made over time.” Lee expressed pride in having restored inflation (rising prices) to the target range of 2% ahead of other major central banks through interest rate policy. He also highlighted meaningful achievements such as improving communication with markets through the introduction of Korea-style forward guidance (K-dot plot), strengthening the Bank’s policy advisory role by publishing over twenty reports on structural reform, becoming the first central bank governor from a non-reserve currency country to chair the Bank for International Settlements (BIS) Committee on the Global Financial System (CGFS), and leading the household debt ratio—which had only risen for the past 20 years—to decline for the first time.

He recalled facing the aftermath of the Russia-Ukraine war and the global acceleration of inflation immediately after taking office, as well as experiencing the nation’s first two “big steps” (0.5 percentage point hikes in the base interest rate), instability in real estate finance, and the impact of the collapse of Silicon Valley Bank in the United States. Lee reflected, “The past four years were not within the boundaries we had anticipated, but rather a period where we constantly had to go beyond them.” He said, “An unprecedented situation of martial law led to economic contraction, and the U.S. administration’s tariff policy also shifted rapidly. Without the dedication and support of the staff, it would have been difficult to manage these crises.”

Lee concluded, “I feel a heavy responsibility handing over the reins while the Middle East war is still ongoing and the foreign exchange and financial markets have not yet fully stabilized. However, the Bank of Korea’s crisis management capabilities, demonstrated by its employees whenever difficulties arose, are second to none compared to any advanced country. I believe that, together with the new governor, we will quickly stabilize the foreign exchange and financial markets.”

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