Deputy Prime Minister Koo Yoonchul Visits Bank of Korea for First Time, Reaffirms Policy Coordination with Governor Lee Changyong

Deputy Prime Minister and Minister of Economy and Finance Koo Yoonchul visited the Bank of Korea for the first time since taking office. During a brief 30-minute meeting, Governor of the Bank of Korea Lee Changyong and Deputy Prime Minister Koo reaffirmed their commitment to cooperate on structural reforms to overcome Korea's economic stagnation and to strengthen policy coordination for this purpose.

Deputy Prime Minister and Minister of Economy and Finance Koo Yoonchul and Bank of Korea Governor Lee Changyong are meeting and applauding at the Bank of Korea in Jung-gu, Seoul on the 7th. Yonhap News, Photo by Joint Press Photographers

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Upon entering the main building of the Bank of Korea in Jung-gu, Seoul, on the morning of August 7, Deputy Prime Minister Koo stated, "Our economy is facing tough challenges. I believe the reason for the decline in potential growth rate is, simply put, a lack of capability in our economy." He emphasized, "All economic agents must collaborate to enhance our capabilities." He continued, "From the perspective of the Ministry of Economy and Finance, we need to focus on and select innovative and promising items. If we nurture these well, labor productivity will rise and technology will improve." He added, "I believe that restoring Korea's pride through a new leap forward for the Korean economy is possible, and we must achieve it no matter what. With a sense of urgency, I will work closely with Governor Lee going forward."

Governor Lee, who welcomed Deputy Prime Minister Koo, said, "Deputy Prime Minister Koo's book 'Revolution Korea' thoroughly outlines what kind of structural reforms are necessary for the Korean economy. This aligns with the structural reform agenda that the Bank of Korea has discussed over the past two years." He added, "The Ministry of Economy and Finance and the Bank of Korea will cooperate as much as possible in responding to economic issues such as structural reform."

In their opening remarks before the closed-door meeting, both sides again highlighted the need for structural reforms to overcome low growth and the importance of policy coordination between the government and the central bank. Deputy Prime Minister Koo said, "I do not consider policies like a 'manufacturing renaissance' to be true policies. Economic policy direction should be based on specific items. Even within manufacturing, we should focus on areas that help the economy, such as artificial intelligence (AI) vehicles or silicon carbide (SiC) semiconductors." He added, "To achieve this, we need a lot of support in terms of finance, taxation, human resources, regulation, and experts," and asked for the Bank of Korea's assistance.

Governor Lee said, "The tariff agreement with the United States went well, so a major burden was lifted before the August Monetary Policy Board meeting. If there had been an issue with tariffs before the meeting, we would have faced a difficult situation, but you handled a tough task at a tough time." He continued, "The issue is not completely resolved yet, but I trust you will continue to do well." He also said, "Thank you for sending your book. It was helpful when the Bank of Korea's think tank conducted research on structural reform. Since the Ministry of Economy and Finance will be the main client, if you select the good parts from the Bank of Korea's restructuring research and discard the bad, it will greatly encourage our researchers." Deputy Prime Minister Koo responded, "If you provide good suggestions, we will actively reflect them."

Bank of Korea Governor Lee Changyong is meeting with Deputy Prime Minister and Minister of Economy and Finance Koo Yooncheol at the Bank of Korea in Jung-gu, Seoul on the 7th. Yonhap News, Photo by Joint Press Photographers

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This meeting between the heads of the fiscal and monetary authorities was essentially an introductory meeting. Previously, the Minister of Economy and Finance and the Governor of the Bank of Korea regularly discussed economic issues through the so-called F4 meetings, which also included the Chairman of the Financial Services Commission and the Governor of the Financial Supervisory Service. However, due to prolonged discussions on organizational restructuring at the Financial Services Commission and the Financial Supervisory Service, there had been a leadership vacuum, and meetings had been held at the vice-ministerial level, leaving no official opportunity for direct discussion. Therefore, this visit is interpreted as a move to quickly promote policy coordination following the completion of organizational restructuring, especially amid growing concerns about the economy. It is expected that key issues such as the introduction of stablecoins, which has recently become a hot topic, and structural reform measures in a low-growth environment will be discussed in earnest going forward. When asked about the continuation of the F4 meetings, Deputy Prime Minister Koo said, "We will work to strengthen communication."

Previously, the heads of the two institutions had also reaffirmed their commitment to policy coordination through mutual visits last year. After former Deputy Prime Minister Choi Sangmok visited the Bank of Korea in February last year, Governor Lee paid a return visit to the Ministry of Economy and Finance in September, continuing the exchange. At the time, Governor Lee emphasized, "In the United States, I often saw the Treasury Secretary and the central bank governor having coffee together every morning. Meeting with the Deputy Prime Minister is a move away from the past practice of limited exchanges between the Bank of Korea and the Ministry of Economy and Finance, and it meets the demands of the times."

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