No need to strengthen macroprudential steps for now: BOK chief

Korea's top central banker said Friday that he does not see the need to beef up the current macroprudential measures "for now" as more time is necessary to assess impacts of monetary easing by major central banks.

South Korea has taken measures to ease excessive cross-border capital flows and reduce short-term foreign debt, including bank levies and tighter regulations on banks' foreign exchange derivatives positions.

Monetary easing steps taken by central banks in the U.S., the eurozone and Japan are likely to make their way into emerging economies, raising concerns the flood of hot money will raise the risks of inflation and strengthen currencies of emerging countries.

Bank of Korea (BOK) Gov. Kim Choong-soo told a group of reporters that though Korea has legal grounds to beef up such macroprudential measures, he does not see the need to do so for now, only with growing prospects for liquidity inflows.

The governor said that though there is the need to give some warning against potential inflows of hot money to Korea, "It is not the time to strengthen the current macroprudential steps as we do not know how much such liquidity will flow into the country."

At the height of the 2008 global financial meltdown, South Korea suffered severe capital outflows and the local currency sharply fell against the dollar even though the country was far removed from the epicenter of the crisis and did not play a role in the cause.

Kim also stressed the need to closely monitor stimulus measures taken by other central banks in major economies in managing its rate policy.

After delivering a rate cut in July, the BOK froze the key rate at 3 percent for the second straight month in September in an apparent bid to save ammunition for any worsening of economic conditions at home and abroad. (Yonhap)