BOK governors gavel carries little weight
By Kim Tong-hyung
Since being named as the country’s top central banker early last year, Kim Choong-soo has touted himself as the man to rock the foundations of the Bank of Korea (BOK).
Vowing to shake the central bank out of what he saw as contagious complacency, Kim had predicted dramatic changes to the organization, which he once ridiculed as a ``Galapagos Island,’’ and showed willingness to involve in the debates on reappraising the bank’s role and purpose.
Judging by the results of the BOK’s organizational reshuffle announced earlier this week, which the bank claimed as its biggest reform since the revision of the Bank of Korea Act in 1998, it appears that Kim is choosing to introduce changes gradually.
The number of departments and subdivisions were trimmed from 30 to 26, and the new structure was set in a way to further shift the balance of power toward the governor at the expense of vice governors. Under the new structure, the directors of each department report directly to the governor and are authorized to make personnel decisions and planning budgets, which had been previously handled by the bank’s five governors.
Another notable change is the establishment of a separate department for managing the country’s foreign exchange reserves, which is now about to reach the $300 billion mark.
But Kim’s previous declaration of rattling BOK employees’ ``iron rice bowl,’’ an idiom referring to the system of guaranteed lifetime employment and high compensation, will have to wait. An agreement with the bank’s unionists, who haven’t warmed up to Kim, will be needed to implement the plans to phase in performance-based pay and peer-review systems. And reforming the organizations at the BOK’s provincial units will have to wait until next year.
Aside from the new currency reserves department, it’s hard to say any significant changes were made to the BOK’s organizational framework. Considering that the bank spent 430 million won on hiring a consulting firm to help shape the new organization, the results of the reform were less dramatic than what beat reporters had been expecting.
Perhaps Kim’s influence will be more evident after the bank makes its new personnel changes on Feb. 28. Several senior officials appear to be in the hot seat and Kim will be looking to replace them with his confidants.
``Although the governor still considers himself as a man on a mission and always arrives with a clear idea and strong opinion about the important issues, he is now showing more willingness to work with those around him rather than running a dictatorship,’’ said a senior BOK official.
``The most meaningful part of the reshuffle was clearly the establishing of the new department for managing foreign exchange reserves.’’
Critics have pointed out that the central bank has been managing its currency reserves too conservatively, and it remains to be seen whether the establishment of the dedicated department will enable diversified management.
Korea’s currency reserves, the world’s sixth largest, amounted to a record high of $295.96 billion at the end of January, and the country’s robust exports and sustained inflows of foreign capital suggest that the amount will continue to grow.
Kim, 63, took over from veteran central banker Lee Seong-tae in April last year, and didn’t waste any time in making his presence felt, speaking of a bigger central bank role in stabilizing financial markets. He also provided an influential voice in last year’s Group of 20 meetings in Seoul by leading the discussions on creating a global financial safety net to prevent Asia’s emerging economies from falling victim to another global crisis.