National audit of the Bank of Korea
Bank of Korea Governor Shin Hyun-song apologized Monday for the central bank's failure to warn the public about single-stock leveraged exchange-traded funds, saying he agreed the Bank of Korea had fallen short.
Responding to a question from Democratic Party of Korea lawmaker Jeong Seong-ho about the Bank of Korea's responsibility in the single-stock leveraged ETF crisis, Shin said at the National Assembly's Finance and Economy Planning Committee national audit that the central bank had "repeatedly raised, in general terms, concerns about equity investment through debt" — but acknowledged the warning on single-stock leveraged ETFs never came.
"At the press conference following the Monetary Policy Board's monetary policy direction meeting at the end of May, I made similar remarks, but at the time we had not fully grasped the volatility in the memory chip sector of the domestic stock market," Shin said. "I agree that we failed to issue any kind of warning about that."
Asked about a June Financial Stability Report in which the Bank of Korea offered a positive assessment of single-stock leveraged ETFs — suggesting they would help prevent domestic investment funds from flowing overseas and attract foreign capital — Shin said the assessment "was not appropriate given the circumstances at the time."
kimstar@heraldcorp.com
