SEOUL, April 21 (AJP) —New Bank of Korea Governor Shin Hyun-song underlined “discretion” and “flexibility” in steering monetary policy as Middle East-driven supply disruptions stoke inflation while weighing on growth.
“Upward pressure on prices and downward pressure on the economy have simultaneously increased due to rising international oil prices following the Middle East conflict,” Shin said in his inauguration address Tuesday, as he began his four-year term.
He pledged to enhance the “efficacy” of monetary policy through a reassessment of policy firepower and closer coordination with the government where needed, while also vowing to strengthen communication with markets.
“We are going through a seismic transitional phase, with an AI-driven technological shift compounded by geopolitical conflicts,” he said.
Domestically, Shin pointed to structural headwinds including demographic decline, widening income disparities, and growth constrained by housing instability and elevated household debt.
“In today’s financial markets, the boundaries between banking and non-banking, as well as domestic and international sectors, are rapidly blurring,” he said. “It has become difficult to fully identify and respond to risks using existing frameworks alone.”
He called for stronger early-warning systems by making more active use of market price indicators and improving visibility into the non-banking sector — a move seen as targeting regulatory arbitrage, with card loans approaching 43 trillion won ($29.2 billion).
On foreign exchange policy, Shin signaled continuity.
“Together with the government, we will promote 24-hour foreign exchange market operations and establish an offshore won settlement system,” he said, echoing plans set out by predecessor Rhee Chang-yong, who had pledged to introduce round-the-clock trading by July.
On digital finance, Shin said the central bank would expand the use of a central bank digital currency (CBDC).
“We will enhance the utility of CBDCs and deposit tokens through the second phase of ‘Project Hangang,’” he said, adding that international cooperation would be key to raising the won’s status in the evolving digital payments ecosystem.
Shin also reaffirmed the importance of structural reform — a core theme under Rhee — calling it “an important part of monetary policy operations.”
He takes office with the won still under pressure, as the dollar hovers near levels last seen after the global financial crisis. The currency was trading at 1,472.4 per dollar, retreating from around 1,520 won before the two-week truce between the United States and Iran.
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