Bank of Korea (BOK) Governor Rhee Chang-yong has transformed the central bank into a dynamic monetary authority by cooperating with not only overseas counterparts but also the private sector.
On Friday, the BOK agreed with the country’s online platform giant Naver Corp. to expand digital technology in the financial and economic sectors, by signing the central bank’s 11th MOU since Rhee took office in April 2022.
That number compared with his predecessor Lee Ju-yeol, who inked 14 partnership deals, mostly with other central banks, while leading the BOK over eight years.
Rhee emphasized active cooperation and communication with both the public and private sectors when he took the helm of the central bank.
“The BOK must become vibrant,” Rhee said during his inauguration speech as critics sarcastically referred to the central bank as 'temple BOK’ due to its passivity.
He wanted the BOK, with its more than 2,000 highly skilled employees, to play a more active role in different sectors.
NAVER, SAMSUNG
The BOK and Naver agreed to connect HyperClova X, the tech giant's generative AI, with the central bank’s vast economic data. The monetary authority also aims to pursue measures to apply digital technology such as big data, the Internet of Things (IoT) and the cloud to its work.
“Naver’s IT is expected to further strengthen the BOK’s policy and research capabilities and the quality of its service to the public,” Rhee said, referring to information technology. Naver CEO Choi Soo-yeon (left) and BOK Governor Rhee sign a cooperation deal on Dec. 22, 2023 (Courtesy of the Bank of Korea) In May, the BOK joined hands with Samsung Electronics Co., the global memory chip leader, to advance the country’s offline central bank digital currency transaction technology.
The BOK also worked with the credit card unit of NH Bank, a major lender in rural areas, in 2022 to analyze the economy of provincial areas based on credit card usage.
The central bank is also cooperating with government bodies at home. It has worked with the Presidential Committee on an Ageing Society and Population Policy to find measures to tackle Korea's record-low birth rate, which is expected to hamper long-term growth in Asia’s fourth-largest economy.
The BOK suggested in a report that the country could more than double its fertility rate, from 0.7 to 1.6, once factors discouraging childbirth such as outdated parental leave practices and urban population density are improved to the levels of Organisation for Economic Co-operation and Development member countries.
The BOK has agreed with the Financial Supervisory Service (FSS) to share financial data of non-bank depository institutions to extend the monetary authority’s policy analysis, which has been focused on banks.
The central bank has signed MOUs with 12 government entities including the National Assembly Secretariat on using big data to guide the country’s strategies and policies.
CENTRAL BANK INDEPENDENCE UNDERMINED?
Rhee is actively communicating with financial markets and other policymakers.
He introduced a BOK chart similar to the US Federal Reserve's dot plot, which indicates where each monetary policymaker thinks interest rates will be at the end of the current year or longer while trying to provide forward guidance.
He regularly meets Finance Minister Choo Kyung-ho, FSS Governor Lee Bokhyun and Financial Services Commission Chairman Kim Joo-hyun, prompting concerns that the BOK may lose its independence.
Rhee, however, defied such worries by saying: “Why don’t you think the BOK could influence the government?”
