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| Bank of Korea Governor Lee Ju-yeol listens to questions from lawmakers during a National Assembly audit on Oct. 23. Yonhap |
By Lee Min-hyung
Lawmakers are pressuring the Bank of Korea (BOK) to widen its non-monetary roles and help the government stabilize employment amid their criticism over the central bank's prevalent complacency at a time of growing economic challenges.
The Bank of Korea Act stipulates that the bank's primary role is to stabilize prices by carrying out effective monetary policies. But Rep. Yoo Sung-kull of the main opposition People Power Party argued this is not enough and the act should be revised in a way to expand the role into employment stabilization.
The call comes amid growing economic uncertainties here and abroad amid prolonged low prices and low interest rates. The outbreak of the COVID-19 pandemic also fueled discussion on central banks across the globe taking on more proactive roles to tackle economic crises in this period of uncertainty, according to Yoo.
He cited other developed countries as examples that the BOK should follow.
For instance, the U.S. Federal Reserve is legally responsible for not just stabilizing prices, but achieving employment stabilization, according to the lawmaker. With the pandemic dealing a blow to the U.S. economy this year, the Fed placed its top priority on stabilizing employment while pushing ahead with monetary easing.
Other central banks in countries such as the United Kingdom, Canada, Australia and New Zealand have also teamed up with the government to stabilize employment-related issues, Yoo said.
Under a revision proposed by the lawmaker, the remit of the BOK will be expanded to include employment stabilization. The revision also mandates the BOK's monetary policy board to discuss employment-related issues during its regular meetings.
"The revision will enable the central bank to assume fresh responsibilities and authority amid lingering criticism that the bank has lost touch with reality," Yoo said.
Rep. Kim Kyung-hyup of ruling Democratic Party of Korea also claimed that the central bank should expand its role into non-monetary areas.
"The BOK places too much emphasis on price stabilization, but the central bank needs to take on more active roles ― such as in employment stabilization ― to support the real economy here," he said.
The central bank is in a position to possibly change its stance in line with the rapid shift in global economic circumstances.
BOK Governor Lee Ju-yeol said Thursday during a press conference that the bank would continue in-depth discussions with politicians over the issue.
"Our stance is that we need to have enough discussions on expanding the BOK's role into employment stabilization, as the central bank may face difficulties when actually undertaking the role and carrying out relevant policies."
But this could also raise expectations that the law revision can bring a positive impact on the economy, he noted.
"We will actively participate in negotiations with the National Assembly at a time when the revision is proposed," he said.
