Lee Hyoung Il, deputy prime minister and minister of finance and economy, visited The Bank of Korea (BOK) and met Governor Shin, Hyun Song, six days after Lee took office on September 22.
The two officials assessed that economic growth was gaining momentum on strong exports and investment, supported by the semiconductor boom, while external uncertainty remained elevated amid rising interest rates in major economies and geopolitical risks.
They also agreed that growing links among financial, foreign exchange and real estate markets require policymakers to look beyond headline macroeconomic indicators and identify risks early, according to a joint statement.
“We should communicate more closely in various ways and discuss coordination for an optimal policy mix to achieve our shared goals of price stability, growth and financial stability,” Lee said in opening remarks.
Lee called for stronger cooperation to monitor financial, foreign exchange and asset markets in an integrated manner and identify risks at an early stage.
He also proposed longer-term cooperation on the internationalization of the Korean won, digital finance, measures to raise the country’s potential growth rate and ways to spread the benefits of growth more broadly.
Shin said macroeconomic stability built on price and financial stability was a prerequisite for sustainable growth as the economy navigates a series of external shocks, including the Middle East conflict and rising long-term government bond yields in major economies.
“The BOK’s recent monetary policy response is expected to help curb demand-side price pressures while strengthening confidence in our economy, stabilizing the exchange rate and easing cost pressures,” Shin said.
He added that monetary policy, together with the government’s macroprudential measures, could also help ease financial imbalances.
Shin stressed that closer communication between the government and the central bank was particularly important under current conditions, while each institution should faithfully carry out its respective responsibilities.
The two sides agreed to continue cooperation through existing channels, including market monitoring meetings, while expanding communication through other channels.
AJP Takeaways
- South Korea’s finance ministry and The Bank of Korea agreed to strengthen policy coordination and joint monitoring of financial, foreign exchange and asset markets.
- Finance Minister Lee Hyoung Il called for closer coordination on price stability, growth and financial stability, as well as longer-term cooperation on won internationalization and digital finance.
- BOK Governor Shin, Hyun Song said price and financial stability were prerequisites for sustainable growth and emphasized closer communication between the government and central bank.
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