By Lee Kyung-min
Bank of Korea Governor Lee Ju-yeol has called for financial regulators to push more radical regulatory reform to foster innovative market players.
To that end, he stressed the government needs patience in allowing financial firms to try new, innovative attempts in the creation of services and products.
Citing a recent meeting with Bank for International Settlements (BIS) heads on the topic of fintech, Lee shared an insight about how China was able to become a leader in the global fintech industry.
“A large scale fintech is called big tech, the greatest number of which are in China. When asked the reason behind it, they said government patience,” Lee said at a press conference at the bank in Seoul.
He added until some major side effects occurred the government simply let them run wild, adding this bears some significance for Korea.
The remarks were part of his suggestions on ways to facilitate structural reform. This is one of the most frequently cited factors hindering growth.
Consistent, cohesive and long-term plans should be prioritized in achieving structural reform, an initiative he has stressed since taking office in 2014.
“I have repeatedly underscored the need to pursue this matter for the country to achieve sustainable growth. No tangible outcome has materialized yet because the process is not only time-consuming but also requires a broad social consensus.”
The government's recent regulatory policy is a step in the “right direction,” with the regulatory sandbox being a valid case in point.
“The government seeks to foster innovation-driven firms with sustainable business models. Also, social consensus has been largely reached to equally value labor market flexibility and job security.”
Lee said greater efforts will be made to dispel criticism of the central bank, known for its reluctance to accept, or indifference to, outside criticism.
Despite worsening economic data and the U.S. Fed's shift to a dovish stance, the top central banker reiterated that it is not the right time to consider lowering the key interest currently set at 1.75 percent.
Lee said the current monetary policy is “accommodative,” a stance clearly distancing himself from outside pressure and market expectation of the possible rate cut.
“The recent recommendation made by the International Monetary Fund stemmed from a greater emphasis put on the downward risk on the Korean economy. But as I have clearly stated multiple times earlier, this year's monetary policy will be accommodative,” he said.
“A range of key factors will be taken into consideration in determining whether to change the stance including financial stability.”