Shin Hyun-song Highlights Inflation Concerns at Confirmation Hearing: "Oil Prices and Exchange Rate Will Gradually Have Greater Impact"

"Although the inflation rate saw only a limited increase up to March, it is expected to gradually rise due to higher oil prices and the exchange rate."

Shin Hyun-song, nominee for Governor of the Bank of Korea, is speaking at the confirmation hearing held on the 15th by the National Assembly's Finance and Economy Committee.

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Shin Hyun-song, the nominee for Governor of the Bank of Korea, has placed particular emphasis on concerns over inflation in his current assessment of the economic situation. At his opening remarks during the confirmation hearing before the National Assembly's Finance and Economy Planning Committee on the 15th, Shin stated, "Military tensions in the Middle East remain, and international oil prices are significantly higher than before the war," offering this diagnosis. Regarding worries about economic growth, he analyzed that although the growth rate will be weaker than initially expected, the robust semiconductor market and the supplementary budget (extra budget) will partially ease downward pressure on the economy. Shin previously forecast that the supplementary budget would raise the economic growth rate by 0.2 percentage points.

However, it would be premature to interpret this as a firmly hawkish (preference for monetary tightening) stance. Shin emphasized that there is great uncertainty in the outlook for both inflation and growth, and that mechanically prioritizing price stability is not desirable. He repeatedly stressed that monetary policy should comprehensively consider the overall flow of the economy, including financial stability and economic conditions. Shin also assessed that the current policy rate (2.50% per annum) is approximately in the middle of the estimated neutral rate range, suggesting the possibility that the rate could remain unchanged for the time being. On this day, Shin also pointed out, "We must continue to monitor the high volatility in the financial and foreign exchange markets, as well as credit risks in vulnerable sectors," and added, "It is also necessary to pay attention to the possibility that risks may be amplified through interactions between the financial and real sectors."

Shin also signaled his intention to continue the "structural reform research" that outgoing Governor Rhee Chang-yong has emphasized. Shin noted, "Changes in demographic structure, deepening polarization and imbalances, high housing prices, and the level of household debt could undermine growth potential," adding, "We will conduct in-depth research on structural reform issues, seek solutions, and when necessary, make policy recommendations." Regarding government policies, he said, "We will communicate and coordinate on necessary matters."

On the issue of digital currency, Shin underlined the importance of a central bank trust-based system. He stated, "Through the second phase of Project Han-gang, we will expand the use of CBDC and deposit tokens based on central bank trust," and added, "We will also actively participate in the Agora Project to ensure that domestic and international payment platforms can be systematically interconnected." Regarding the introduction of a won-based stablecoin, Shin expressed basic support but emphasized that "maintaining trust in the currency" is most important. He also stated his view that such instruments could coexist in a complementary and competitive manner within the ecosystem.

Meanwhile, at the hearing, issues such as Shin's foreign currency assets and his family's nationality arrangements were raised. Shin explained, "I have already sold foreign assets amounting to 1.89 billion won, including exchange-traded funds (ETFs) and UK government bonds, and I plan to sell other overseas assets sequentially." Regarding the fact that his eldest daughter did not report loss of nationality for 27 years, Shin said, "I regret this. The failure to file the report was due to a lack of clear understanding of the related procedures and information," and stressed, "There was no benefit received as a result."

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