New BOK chief expected to shift policy focus toward price stability over globalization
By Kim Rahn
"It is thrilling to wait and see what will happen."
This is what a Bank of Korea (BOK) staffer said when asked what he thinks of the change of the central bank's governor.
Workers at any organization will have expectations for a new chief, but for the BOK, it is more special because the incoming boss is Lee Ju-yeol, former BOK senior deputy governor who directed scathing criticism at the reform drives of outgoing Governor Kim Choong-soo.
Attention is now focused on whether Lee will try to bring back the previous roles of the bank and ignore Kim's initiatives, such as globalization of the BOK.
Lee ― uneasy relationship with Kim
Lee had been at the central bank for 35 years, taking key positions there along the way including research department director general, deputy governor and senior deputy governor.
It is said that he clashed with Kim over various issues during his last two years as senior deputy governor, as Kim brought radical changes to the conservative organization by emphasizing a global mindset and breaking with its traditional personnel affairs system. Kim rejected people Lee suggested for high-ranking positions.
Kim's measures prompted a backlash from some BOK members. For example, Lee boldly criticized Kim in his farewell speech saying: "Many people were hurt as their reputations, which they had built for years, were not recognized any more amid the global and reform drives."
He said that the BOK's 60-year-old values and standards had been set aside and many people were confused. "I hope the leader and the members share the values of the organization, and there is a change from one-way communication to two-way."
Potential changes
BOK staffers generally welcomed Lee's comeback, as he has a deep understanding of the organization.
"We thought we would never again have a governor who started and maintained a career at the BOK, as bureaucrats and aides to policymakers have been filling the post. Lee's nomination was a surprise, but a good surprise for most of us," a high-ranking official at the BOK said, asking not to be named.
Market watchers predict that Lee will have different priorities in managing the BOK from Kim and bring changes to the organization.
It seems globalization will no longer be a primary goal of the BOK. Rather he is expected to focus on the central bank's role of stabilizing prices and the financial market.
In his farewell speech, Lee also said he, as a member of the monetary policy committee, felt heavy responsibility for the market criticism that the BOK failed to fulfill its duty of price stabilization.
HSBC economist Ronald Man said Lee may stress the need to strengthen the central bank's credibility. "While this (comment) may have contributed to his reputation as a hawk, this does not necessarily mean he is one ― for inflation did exceed the central bank's target. Rather, we believe that Lee Ju-yeol may want to hike the BOK's policy rate preemptively once he deems there are sufficient signs of excessive price pressures building in the economy. Therefore, we view him as a neutral choice."
Some expect a personnel "purge," where Lee gives less important positions to those who were favored by Kim, while Lee's former aides return to important posts.
But others say he may not be able to do that. "Lee knows well that such a huge reshuffle can shake the organization as Kim's reshuffle did," the official said.
There may not be major reorganization until April of next year when the terms of current senior deputy governor Park Won-shik and three deputy governors ― Kang Juno, Kang Tae-soo and Kim Jun-il ― end, the official said, adding some of Lee's old aides may come back at that time.
In referring to those expectations and rumors, Lee told The Korea Times, "Any of my comments can be misinterpreted and confuse the market. I will reveal my vision and management plan at the National Assembly's hearing on March 19."
However, the recent organization of his hearing preparation team may hint at what the future may hold. As head of the team, Lee picked Lee Heung-mo, one of his close aides who used to take important posts but was dispatched to the BOK's Economic Research Institute, a less-important job, after Governor Kim took office.
By Kim Rahn
 |
| Lee Ju-yeol, nominee for Bank of Korea governor |
This is what a Bank of Korea (BOK) staffer said when asked what he thinks of the change of the central bank's governor.
Workers at any organization will have expectations for a new chief, but for the BOK, it is more special because the incoming boss is Lee Ju-yeol, former BOK senior deputy governor who directed scathing criticism at the reform drives of outgoing Governor Kim Choong-soo.
Attention is now focused on whether Lee will try to bring back the previous roles of the bank and ignore Kim's initiatives, such as globalization of the BOK.
Lee ― uneasy relationship with Kim
Lee had been at the central bank for 35 years, taking key positions there along the way including research department director general, deputy governor and senior deputy governor.
It is said that he clashed with Kim over various issues during his last two years as senior deputy governor, as Kim brought radical changes to the conservative organization by emphasizing a global mindset and breaking with its traditional personnel affairs system. Kim rejected people Lee suggested for high-ranking positions.
Kim's measures prompted a backlash from some BOK members. For example, Lee boldly criticized Kim in his farewell speech saying: "Many people were hurt as their reputations, which they had built for years, were not recognized any more amid the global and reform drives."
He said that the BOK's 60-year-old values and standards had been set aside and many people were confused. "I hope the leader and the members share the values of the organization, and there is a change from one-way communication to two-way."
Potential changes
BOK staffers generally welcomed Lee's comeback, as he has a deep understanding of the organization.
"We thought we would never again have a governor who started and maintained a career at the BOK, as bureaucrats and aides to policymakers have been filling the post. Lee's nomination was a surprise, but a good surprise for most of us," a high-ranking official at the BOK said, asking not to be named.
Market watchers predict that Lee will have different priorities in managing the BOK from Kim and bring changes to the organization.
It seems globalization will no longer be a primary goal of the BOK. Rather he is expected to focus on the central bank's role of stabilizing prices and the financial market.
In his farewell speech, Lee also said he, as a member of the monetary policy committee, felt heavy responsibility for the market criticism that the BOK failed to fulfill its duty of price stabilization.
HSBC economist Ronald Man said Lee may stress the need to strengthen the central bank's credibility. "While this (comment) may have contributed to his reputation as a hawk, this does not necessarily mean he is one ― for inflation did exceed the central bank's target. Rather, we believe that Lee Ju-yeol may want to hike the BOK's policy rate preemptively once he deems there are sufficient signs of excessive price pressures building in the economy. Therefore, we view him as a neutral choice."
Some expect a personnel "purge," where Lee gives less important positions to those who were favored by Kim, while Lee's former aides return to important posts.
But others say he may not be able to do that. "Lee knows well that such a huge reshuffle can shake the organization as Kim's reshuffle did," the official said.
There may not be major reorganization until April of next year when the terms of current senior deputy governor Park Won-shik and three deputy governors ― Kang Juno, Kang Tae-soo and Kim Jun-il ― end, the official said, adding some of Lee's old aides may come back at that time.
In referring to those expectations and rumors, Lee told The Korea Times, "Any of my comments can be misinterpreted and confuse the market. I will reveal my vision and management plan at the National Assembly's hearing on March 19."
However, the recent organization of his hearing preparation team may hint at what the future may hold. As head of the team, Lee picked Lee Heung-mo, one of his close aides who used to take important posts but was dispatched to the BOK's Economic Research Institute, a less-important job, after Governor Kim took office.
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