[FORUM]No more 'temps' as BOK leadersThe governor of the Bank of Korea, if we rely on legislation that laid out the qualities he must display, should be the greatest person in Korea. The Bank of Korea Act says that the governor of the nation's central bank must be someone "of lofty integrity with excellent experience in finance."
Lawmakers who drafted and approved that language in 1950 seemed determined to get the best person possible to manage the nation's currency.
Government officials frowned at the language, which demanded morality higher than that required of the president, but they tolerated the somewhat pompous language and did not ask for the Assembly to revise it ?until a few years ago. The clause was omitted from the new Bank of Korea Act in late 1997. Some may joke that now anybody could be the head of the central bank, just as anyone could be president.
It is fortunate that Park Seung, the new governor of the bank, is reputed to meet the five-decade-old qualifications. He has just started his four-year term, but not many bankers expect him to complete his term. For stable economic growth, a nation's central bank must be able to pursue monetary policies untinged by politics. So the terms of the central bank head and members of the Monetary Board should be guaranteed regardless of changes in the Blue House.
Alan Greenspan was nominated to lead the Federal Reserve Board by President Ronald Reagan in 1987. Mr. Greenspan was reappointed by President Clinton and has been in office for 15 years. William M. Martin, one of Mr. Greenspan's predecessors, served for 19 years from 1951 to 1970. That stability is good for any nation's monetary policy.
I hope that in Korea the governors of the central bank will at least complete their full terms. Unfortunately, almost without exception, a change in the presidency has been followed by a change of governors at the central bank. The Bank of Korea's labor union and civic groups are demanding a guarantee of the term of the head of the central bank, but that is not enough. Governors themselves should make efforts to defend their tenure. I do not mean that they should butter up the government or the opposition party to maintain their posts, but they should be aware of the importance of their position and show a commitment to do their job impartially so politicians will hesitate to meddle.
Do you think President Clinton let Mr. Greenspan keep his post just because he liked him? Like everyone else, President Clinton probably wanted to replace the Fed chief with his own man. But President Clinton was too politically astute to do so, because he knew the financial community and the general public trusted the Federal Reserve led by Mr. Greenspan.
If the Bank of Korea is to earn that much trust, its priority must be to draw up and execute politically neutral policies based on the law, unswayed by the opinions of the government, politicians or the general public.
The economic environment has changed dramatically over the past decade, and conflicts between the government and the central bank over monetary policy are easy to foresee. The central bank should act on its own judgement, and if it sees any problems in the economy such as signs of a bubble or inflation, it should take preemptive measures without deferring to the administration.
Another thing the central bank should keep in mind is that it should beef up financial services offered to the people. Without understanding and support from the voters, the bank's monetary policy would not work as effectively as it should. The Bank of Korea is "the bank of banks," yet it has been criticized for being infested with red tape and bureaucracy, which some argue are worse in the bank than in the government. The central bank should take the attitude that commercial banks are its colleagues, not its subordinates.
The bank also should make the best use of its ample human resources in research so it can promote the general public's interest and understanding of the important economic issues.
The bank should not be silent about the government's financial overhaul plans just because laws are changed and its commission to oversee commercial banks was removed from its portfolio.
The writer is director of the JoongAng Ilbo Economic Research Institute.
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