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BOK Governor Delivers Speech at NSD

Dec 21-2023   



On December 8, Dr. Chang Yong Rhee, Governor of Bank of Korea (BOK), delivered a keynote speech entitled Monetary Policy in Practice: Integrated Policy Framework and Forward Guidance at NSD Policy Talk, a landmark event of the NSD. It was the third speech in the Central Bank Governor Lecture Series, which is part of NSD Policy Talk.

 

Dr. Chang Yong Rhee is the Governor of the Bank of Korea and the Chairman of its Monetary Policy Board. Prior to joining the BOK, he was Director of the Asia and Pacific Department at the IMF from 2014 to 2022; Chief Economist of Asia Development Bank from 2011 to 2014; Secretary General and Sherpa of the Presidential Committee for the 2010 G-20 Seoul Summit from 2009 to 2011; Vice Chairman of the Financial Services Commission from 2008 to 2009. He was Professor, Associate Professor, and Assistant Professor of Economics at Seoul National University from 1994 to 2008; and Assistant Professor at University of Rochester from 1989 to 1994. He received a Ph.D. in Economics from Harvard University in 1989.

 

Dr. Chang Yong Rhee’s speech focused on the application of monetary policy’s Integrated Policy Framework (IPF) in emerging markets and the practice in South Korea of IPF and Forward Guidance.

 

He pointed out that the economic systems of emerging markets have some structural features, such as their policy’s substantial susceptibility to external influences, imperfect financial market, and insufficient credibility of central banks. Therefore, these countries can’t merely rely on policy interest rate adjustment to cope with economic fluctuations and promote financial and price stabilities. Practical experiences of Asian emerging markets have proved that combining diverse policy tools is a viable solution, he said, adding that such practice has catalyzed the transformation of mainstream theoretical frameworks. In recent years, the IMF and the Bank for International Settlements (BIS) have both established policy frameworks welding various policy tools. The former refers to it as Integrated Policy Framework, and the latter, Macro-Financial Stability Framework.

 

Dr. Chang Yong Rhee then introduced BOK’s series of measures to address the hike in household debt, housing price, and inflation rate since 2020. In particular, he highlighted the significance of Forward Guidance as a monetary policy tool. Previously, the BOK maintained strategic ambiguity with regard to future policy direction. But it has come to the realization that enhancing policy implementation transparency and making timely announcement of the Monetary Policy Board’s prediction of the policy rate in the next three months are conducive to guiding market expectations about inflation.

 

Prof. Huang Yiping, host of the event, commended Dr. Chang Yong Rhee on his accomplishments as an outstanding economist. He also introduced Dr. Chang Yong Rhee’s attention to China during his tenure as Director of the Asia and Pacific Department at the IMF and his academic partnership with PKU Institute of Digital Finance.

BOK Governor Delivers Speech at NSD

Dec 21-2023   



On December 8, Dr. Chang Yong Rhee, Governor of Bank of Korea (BOK), delivered a keynote speech entitled Monetary Policy in Practice: Integrated Policy Framework and Forward Guidance at NSD Policy Talk, a landmark event of the NSD. It was the third speech in the Central Bank Governor Lecture Series, which is part of NSD Policy Talk.

 

Dr. Chang Yong Rhee is the Governor of the Bank of Korea and the Chairman of its Monetary Policy Board. Prior to joining the BOK, he was Director of the Asia and Pacific Department at the IMF from 2014 to 2022; Chief Economist of Asia Development Bank from 2011 to 2014; Secretary General and Sherpa of the Presidential Committee for the 2010 G-20 Seoul Summit from 2009 to 2011; Vice Chairman of the Financial Services Commission from 2008 to 2009. He was Professor, Associate Professor, and Assistant Professor of Economics at Seoul National University from 1994 to 2008; and Assistant Professor at University of Rochester from 1989 to 1994. He received a Ph.D. in Economics from Harvard University in 1989.

 

Dr. Chang Yong Rhee’s speech focused on the application of monetary policy’s Integrated Policy Framework (IPF) in emerging markets and the practice in South Korea of IPF and Forward Guidance.

 

He pointed out that the economic systems of emerging markets have some structural features, such as their policy’s substantial susceptibility to external influences, imperfect financial market, and insufficient credibility of central banks. Therefore, these countries can’t merely rely on policy interest rate adjustment to cope with economic fluctuations and promote financial and price stabilities. Practical experiences of Asian emerging markets have proved that combining diverse policy tools is a viable solution, he said, adding that such practice has catalyzed the transformation of mainstream theoretical frameworks. In recent years, the IMF and the Bank for International Settlements (BIS) have both established policy frameworks welding various policy tools. The former refers to it as Integrated Policy Framework, and the latter, Macro-Financial Stability Framework.

 

Dr. Chang Yong Rhee then introduced BOK’s series of measures to address the hike in household debt, housing price, and inflation rate since 2020. In particular, he highlighted the significance of Forward Guidance as a monetary policy tool. Previously, the BOK maintained strategic ambiguity with regard to future policy direction. But it has come to the realization that enhancing policy implementation transparency and making timely announcement of the Monetary Policy Board’s prediction of the policy rate in the next three months are conducive to guiding market expectations about inflation.

 

Prof. Huang Yiping, host of the event, commended Dr. Chang Yong Rhee on his accomplishments as an outstanding economist. He also introduced Dr. Chang Yong Rhee’s attention to China during his tenure as Director of the Asia and Pacific Department at the IMF and his academic partnership with PKU Institute of Digital Finance.