Kwon Min-su seen as BOK's top international finance expert

'Won't label myself hawk or dove — will follow the data'

Kwon Min-su speaks at his inauguration ceremony Friday at the Bank of Korea annex, saying he will do his utmost as deputy governor, drawing on experience from joining the bank in 1995 through his most recent post overseeing foreign exchange market development. [Bank of Korea]
Kwon Min-su speaks at his inauguration ceremony Friday at the Bank of Korea annex, saying he will do his utmost as deputy governor, drawing on experience from joining the bank in 1995 through his most recent post overseeing foreign exchange market development. [Bank of Korea]

Kwon Min-su, the newly inaugurated Bank of Korea deputy governor, said Friday that monetary policy decisions going forward would weigh not only growth and inflation but also financial stability and the potential side effects of interest rate adjustments. He also said the won-dollar exchange rate would face downward pressure over the medium to long term, driven by economic fundamentals.

Speaking to reporters after his inauguration ceremony Friday, Kwon was asked what factors he would prioritize in future interest rate decisions. "We need to consider both the growth trajectory and inflation, as well as financial stability and the policy effects and side effects that could arise from raising interest rates," he said.

"Rather than singling out any one factor, this is a time when we need to make policy decisions in a balanced, careful and, when necessary, flexible manner," he added.

On his monetary policy stance, Kwon said he would not yet define himself as a hawk or a dove. "I will make flexible judgments case by case, depending on the situation and the data," he said.

On the recent decline in the won-dollar exchange rate, Kwon said the rate had not been moving in line with fundamentals and that short-term capital flows had been dominating its direction. "Given that the stock market is performing well and the current account surplus is large, I think it is fundamentally right for the exchange rate to move lower in line with the fundamentals," he said.

However, he cautioned that uncertainty remained. "We don't know how the stock market will move going forward, and many external variables remain, including the situation in the Middle East," he said. "We cannot ignore the exchange rate entirely, so we need to weigh all factors in a balanced way."

Kwon also said he had not yet formed a view on the dot plot, which charts policymakers' interest rate projections six months ahead. "I will attend the meeting starting Monday and exchange views with the Monetary Policy Board members before organizing my thoughts and reaching a decision," he said.

Kwon, who previously served as deputy governor for international finance and cooperation, identified the internationalization of the won as a key priority. "The internationalization of the won is an enormous task, and we are taking it step by step," he said. "A major challenge is to run a settlement pilot program starting in September and then ensure the won can be used sufficiently for payments overseas starting next year."

On the around-the-clock operation of the foreign exchange market, he said conditions were stabilizing but trading volume had yet to reach a satisfactory level. "I intend to focus on increasing trading volume and expanding the depth and breadth of the market," he said.

On South Korea's bid for inclusion in the MSCI Developed Markets index, Kwon said it was important not only to improve the regulatory regime but also to ensure that market participants could feel the changes in practice.

"Policymakers may believe all the necessary systems are in place, but in fact there are longstanding practices on the ground, and market participants may not be fully aware that the rules have changed," he said. "I think we need to focus right now on making sure there are no problems at the most basic level, so that communication with the market works well."


forest@heraldcorp.com