BOK Governor Long on Words, Short on Substance

By Kim Jae-kyoung

Staff Reporter

Since taking office on April 1, Bank of Korea (BOK) Governor Kim Choong-soo has stressed that he would try his best to reduce the perception gap between him and the market over the economy and financial markets.

To that end, the central bank governor said that he would improve communication in the market by sharing as much information as the central bank has in order to help keep market participants on the same page with policymakers.

His remarks came as the financial market, particularly the bond market, turned volatile, following his nomination as the BOK governor in March. The nomination strengthened the market belief that the key interest rate will remain on hold for a while as Kim was considered more growth-oriented than his predecessor.

Against this backdrop, his first press conference attracted a lot of media spotlight and market attention. He received a flood of questions on his analysis of the economy and monetary policy.

He tried his best to give a full explanation about every single issue based on his extended knowledge of the economy. But his debut failed to impress the market because he was lacking in an "art of sophisticated rhetoric."

Most journalists described his first conference as "informative but repetitive; talkative but with little message." In other words, Kim failed to deliver any meaningful message to the market and could not reduce the perception gap.

For example, he said that inflation pressure would increase in the second half of 2010 and next year, but that it should not be a problem. He mentioned that mortgage loans are increasing again, but said that this should not be dangerous to the economy.

He seemed to try to avoid any gesture or language that could give the market any inkling about the direction of future monetary policy. In that regard, he did a good job. But to be a better communicator and set his image as a central bank governor, he should speak in a more refined manner by polishing up his art of rhetoric.

"Governor Kim was very careful, talkative and doesn't really look to be fit for a central bank governor; instead, he rather seems more suitable to be the president of the Korea Development Institute," Standard Chartered First Bank chief economist Oh Suk-tae said.

Kim's goal to become a good communicator is a step in the right direction. But he should know that more words do not necessarily mean better communication. He needs to send delicate messages to the market.

Kim may need to pause for a moment to think about the phrase "When Greenspan talks, the markets listen" and how the former U.S. Fed chairman gained respect from the market. He should remember that he can be a real independent governor only when the markets say, "When Kim Choong-soo talks, the markets listen." One caveat is that, in the case of Greenspan, the markets apparently listened too much, he now is blamed for contributing to the "Great Recession."