New Governor Shin Hyun Song's Inaugural Message: "In Times of Great Transformation, the Bank of Korea Must Evolve... Seeking Answers Through Action"

"We are living through a time of great transformation brought about by geopolitical conflicts and the artificial intelligence (AI) technological revolution. I will seek answers through action and write new theories as we move forward."

This was the inaugural statement of Hyun Song Shin, the new Governor of the Bank of Korea, on his first day in office. At his inauguration ceremony held at the Bank of Korea's annex in Jung-gu, Seoul on the 21st, Governor Shin emphasized the need to "re-examine the role of the central bank in this era of transformation," highlighting the importance of "finding solutions through action that goes beyond established theory." During the ceremony, Governor Shin made clear his determination to enhance the effectiveness of monetary policy and to strengthen early warning systems for financial stability. He also identified the expansion of the won's internationalization and a greater role in structural reforms as key initiatives moving forward.

Hyun-Song Shin, the newly appointed Governor of the Bank of Korea, is arriving at the Bank of Korea in Jung-gu, Seoul on the 21st.

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Governor Shin noted that, "Looking back, the history of central banking has been a process of continuous evolution in response to changes in the economic environment," offering a historical perspective. He explained that 17th-century deposit banks, the forerunners of modern central banks, played a pivotal role in establishing trust in currency during a time of competing metallic currencies by issuing credible deposits and facilitating settlements. Through the Great Depression in the early 20th century and stagflation in the 1970s, central banks became the main pillars of macroeconomic management, aiming for price stability and growth. Governor Shin stressed that "the evolution of central banks was not simply a result of established theory, but rather a process where practical experience led to the development of theory." He emphasized that "the challenges we face today also require us to seek answers through action and to write new theories as we go."

He outlined the key priorities for the next four years as follows: ▲Enhancing the effectiveness of monetary policy ▲Strengthening early warning mechanisms for financial stability ▲Internationalization of the won ▲Expanding the role in structural reform. He remarked, "Given the heightened uncertainty in prices and growth trajectories due to supply shocks from the war in the Middle East, we must pursue price stability and financial stability through prudent and flexible monetary policy management." He added, "To improve the effectiveness of monetary policy, we will reassess policy tools and collaborate with the government as needed on relevant areas."

Governor Shin also signaled changes in the approach to financial stability. He stated, "As the boundaries between banks and non-banks, and between domestic and foreign sectors, are rapidly dissolving, we will actively utilize market price indicators along with traditional prudential indicators to enhance our early warning capabilities." He especially highlighted the need to improve access to information in the non-bank sector and to expand the scope of analysis to include off-balance-sheet transactions by financial institutions and non-traditional financial products.

Hyun Song Shin, the new Governor of the Bank of Korea, is arriving at the Bank of Korea in Jung-gu, Seoul on the 21st.

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Governor Shin, whose area of expertise includes the importance of trust in currency and payment settlement stability, once again stressed these points. He stated, "To internationalize the won, we will work with the government to open the foreign exchange market 24 hours a day and establish an offshore won settlement system, thereby improving the accessibility and stability of foreign exchange transactions in line with international standards." He expressed his ambition to elevate the won's global status by promoting both capital and real transactions based on the Korean currency.

On digital financial innovation, he pledged to increase the utility of central bank digital currency (CBDC) and deposit tokens through the second phase of 'Project Hangang,' and to raise the profile of the won in the digital payment and settlement environment through international cooperation, such as the 'Project Agora.' He added, "We will work with the government to ensure that internationalization of the won, payment settlement innovation, and the macroprudential framework form a 'three-pronged approach' that creates synergy."

He also called for the Bank of Korea to play an active role in structural economic reform. Governor Shin pointed out that demographic changes, deepening polarization, and challenges related to the real estate market and household debt are weakening growth momentum. He said, "Structural factors are not separate from monetary policy but are an important part of its operation; thus, we will continue in-depth research and policy recommendations on these issues."

Hyun-Song Shin, the new Governor of the Bank of Korea, is greeting as he arrives at the Bank of Korea in Jung-gu, Seoul, on the 21st.

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Shin's term as the 28th Governor of the Bank of Korea will run until April 20, 2030. The National Assembly's Strategy and Finance Committee held a confirmation hearing on the 15th, and, after discussion, adopted the hearing report the day before Shin's appointment was approved by President Lee Jaemyung. As a result, the transition to the new governor has proceeded without interruption following the retirement of former Governor Rhee Chang Yong. Governor Shin said, "I apologize once again to the public for the concerns caused by the difficulties during the confirmation process," and added, "There is much work to do. I will let my performance as governor speak for itself."

Governor Shin is a macroeconomic and financial expert who has served as a professor at Oxford University, the London School of Economics, and Princeton University; an advisor to the Bank of England; a resident scholar at the International Monetary Fund (IMF); and a member of the Financial Advisory Committee at the Federal Reserve Bank of New York. Since 2014, he has also served as Head of Research (Chief Economist), Economic Adviser, and Head of the Monetary and Economic Department at the Bank for International Settlements (BIS). He will serve as Governor of the Bank of Korea for the next four years.

Meanwhile, the BIS, where Governor Shin worked for 12 years prior to his appointment, also congratulated him on his new role. Pablo Hernandez de Cos, Secretary General of the BIS, said, "As a member of the Executive Committee and a core contributor to the BIS, Governor Shin provided intellectual leadership and set strategic directions, advancing the research and analysis that support central banks. I sincerely congratulate him on his appointment as Governor of the Bank of Korea."

Shin Hyun-sung, the newly appointed Governor of the Bank of Korea, is arriving at the Bank of Korea in Jung-gu, Seoul on the 21st and responding to questions from reporters.

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