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| Bank of Korea Governor Lee Ju-yeol announces its decision to freeze the key interest rate at 1.25 percent at its headquarters in Seoul, Nov. 29. Yonhap |
By Lee Min-hyung
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| Yoon Suk-heun, governor of the Financial Supervisory Service, |
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| Eun Sung-soo, chairman of Financial Services Commission |
"Our monetary policy should be carried out in a way to support the economic recovery and stabilize prices," he said. "We need to keep relaxing currency policies, as economic growth here in 2020 will likely fall below our expectation."
The outlook came in response to the prolonged economic slowdown. In October, Lee also expressed his pessimistic view for the economy to achieve its 2-percent growth target during a regular National Assembly audit.
To revitalize the sagging economy, the BOK cut its key interest rate to an all-time low of 1.25 percent, Oct. 16. The central bank also kept the rate unchanged during the final rate-setting meeting in November 2019.
Lee said the central bank would decide on the level of monetary easing in accordance with how the external risk factors unfold.
"To be specific, the prolonged trade feud between the U.S. and China, even if they have recently made some progress, comes as a geopolitical risk for the local economy," he said. "On the domestic front, we have to raise concerns over weakening growth engines here due to such factors as the low birthrate, aging society and social polarization."
On top of that, the Korean economy cannot rely on export-driven growth amid the weakening of global value chain dynamics that resulted in the economic slowdown here and abroad, according to him.
To tackle the pessimistic outlook for an economic rebound in 2020, the BOK stressed the need to enhance its capability for precise diagnosis and prediction of the economic trend.
"The BOK should be capable of accurately analyzing economic conditions by utilizing latest technologies, such as artificial intelligence and big data," he said.
The governor went on to urge his staff to spare no efforts in embracing the era of digital currency.
"The BOK should not remain negligent in research and development for innovative payment technologies," he said.
Toward the end, the chief of the central bank said it would continue to enhance research manpower on the central bank digital currency (CBDC).
With the rise of cryptocurrency, the CBDC is the talk of global financial authorities and central banks. Some countries, such as China, are in an advanced level of talks before issuing government-controlled digital currencies.
Yoon Suk-heun, governor of the Financial Supervisory Service, also reaffirmed the willingness to push for policies to eliminate potential risk factors which will get in the way of the economy recovery.
"We need to strengthen our expertise in finding out financial risks beforehand and come up with countermeasures," he said in a New Year's address.
Financial Services Commission Chairman Eun Sung-soo also shared its 2020 goal of promoting small- and medium-sized companies for the longer-term economic growth here.
"A series of relaxing monetary policies here and abroad added more liquidity to the market, but the capital was used in an unproductive manner in areas, such as real estate, which did little good to economic efficiency here," he said. "We are going to supply small venture firms, rather than households, with the capital."
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