Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
Bank of Korea to grow ties with Central Asian countries
Bank of Korea Governor Lee Ju-yeol demonstrates its next-generation financial network system at headquarters in Seoul, Oct. 21. Courtesy of Bank of Korea
By Lee Min-hyung
By Lee Min-hyung
The Bank of Korea (BOK) plans to develop ties with its Central Asian counterparts in accordance with Cheong Wa Dae's initiatives to expand partnerships with former Soviet bloc countries by enhancing economic and political partnerships there.
The New Northern Policy is primarily aimed at cooperation with developing Central Asian economies ― such as Mongolia and Kazakhstan ― which have not had significant financial partnerships with South Korea. Russia is also included in the policy.
Some of the countries have relatively weaker financial infrastructures than Korea, so the central bank hopes to share its abilities and experience in the central bank's key roles ― such as payment and settlement systems, monetary policies and financial stabilization measures.
“Regarding the specifics of the New Northern Policy, the BOK will keep widening the bank's knowledge-sharing programs with the countries in Central Asia,” a central bank official said Sunday.
The core point is that the BOK's outreach to Central Asia will serve as a building block for more Korea businesses to better export their financial infrastructures in areas such as stock transactions and credit-rating systems.
“We have advanced our financial partnership with Mongolia and Uzbekistan by assisting financial authorities and relevant services there with our educational and consulting programs,” the official said. “The BOK will continue to increase the number of countries involved to give a boost to our drive for the New Northern Policy.”
The policy, along with the New Southern Policy, is a flagship economic drive pushed by the government. But the New Northern Policy has gained less attention than expected in contrast to the latter, which centers on partnerships with the Association of Southeast Asian Nations (ASEAN) countries.
The New Southern Policy comes with greater significance for the incumbent administration, as the 10-member ASEAN bloc has enormous potential for economic growth due largely to the demographic factor.
The BOK, for its part, also focused more on partnerships with the ASEAN bloc, but the central bank said there were chances for it to expand ties with the Central Asian countries as well. The BOK thinks this will help Korean financial firms find more business opportunities in the region.
BOK Governor Lee Ju-yeol also took the initiative in leading the partnership with its Asian counterparts by participating in the Executives' Meeting of East Asia-Pacific (EMEAP) held online in August. The meeting was first held in 1991 with a view to enhancing information sharing and mutual financial growth among 11 member countries in Asia ― including Korea, Japan, China and Indonesia. The BOK has served as a chair of a working group under the EMEAP for four years since July 2016.
Other state-run lenders ― such as the Korea Development Bank (KDB) and the Export-Import Bank of Korea (Eximbank) ― are also seeking to support both the New Southern and New Northern Policy, helping more Korean companies expand their foothold in the developing regions.
Last month, the KDB established the “New Southern Fund,” worth 170 billion won. This is intended to provide financial support for Korean firms seeking to expand business in ASEAN. Qualifying recipients of the fund are companies that own local corporations or have joint ventures in the countries.
In June, Eximbank also signed a partnership with Hana Bank for more Korean companies to tap into the Asian countries. Earlier, the two banks provided loans worth 28 million euros to the National Bank of Uzbekistan (NBU) which then offered loans to the country's local firms importing Korean products.
Under the partnership, the two Korean lenders pledged to continue supporting the global expansion of Korean firms, particularly in the Asian market.