[EDITORIALS]Revolving-door financeThe recent replacement of a member of the monetary policy committee at the Bank of Korea has caused a strong backlash from the central bank. The seven-member committee is the central bank's decision-making body for monetary and credit policy.
The turmoil began when a committee member who had more than two years left in his term was suddenly nominated as head of the Korea Stock Exchange. The stock exchange says that it chose him after a formal application and selection procedure. But the Bank of Korea says the change was made on the Kim administration's orders. The central bank took the unusual step of issuing a statement signed by its entire staff. The statement complained that if committee members can be easily changed, that would discourage the committee from making neutral and consistent policy decisions.
The Bank of Korea Act says that members of the panel are to be appointed by the president from among "persons with ample experience of, or with prominent knowledge concerning, finance, economy and industry." They must be recommended by organizations dealing with financial matters. The law also guarantees a four-year term for policy committee members.
The committee member in question was recommended by the Ministry of Finance and Economy, so if the administration did order his move to the stock exchange as we believe, it broke the law. What was the point of revising the law after the 1997 financial crisis? The government did so to ensure neutrality and professionalism in the central bank's monetary policies by guaranteeing the tenure of committee members and making their jobs full-time positions. In reality, the Finance and Economy Ministry exercises the power to recommend a committee member that is supposed to be in the hands of the Korea Federation of Banks, the Korea Chamber of Commerce and Industry and the Korea Securities Dealers Association. The administration still wields too much influence.
At the same time, the Bank of Korea staff should reflect on its treatment of monetary board members as transients, and the committee must stand up for its rights.