[VIEWPOINT]Finally, high hopes for bank’s head

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[VIEWPOINT]Finally, high hopes for bank’s head

Nowadays, we are used to hearing disappointment and regret after the announcement of a personnel appointment. But things are different in the case of Lee Seong-tae, appointed as governor of the Bank of Korea.
People are saying a suitable person has been appointed. It is true that our society has outrageously high standards for personnel appointments. Candidates should be equipped with ability, high moral standards and flawless character, and they are required to share the president’s idealism.
And that is why faultlessness and all-round character is emphasized, rather than one’s actual ability for the job.
The governor of the Bank of Korea is a position many people want. People think it is a good title to cap a career after holding government positions such as deputy prime minister or other high posts.
It is an honorable position that the family can be proud of and the four-year term is guaranteed, no matter the political situation. That is why many people compete shamelessly for the job.
Not anyone can do it. The governor of the central bank needs to have expertise in financial affairs, personal conviction and a great personality. The old Bank of Korea act even had an article that stated, “The governor should be chosen from people who have a noble personality and extraordinary experience in finance . . . ”
I think that article’s spirit still lives. Considering the fact that Mr. Lee worked with conviction for 40 years or so at the Bank of Korea and held some important responsibilities there, he seems to have earned the job. More often than not, however, we have seen noble characters change as they climbed the ladder of social success.
There are bound to be strengths and weaknesses in new appointees.
The facts that Mr. Lee graduated from Busan Commercial High School and that President Roh Moo-hyun knows him well are weaknesses. But they could also be strong points.
It is important for the governor of the Bank of Korea to talk to various people about various economic subjects and have the ability to persuade and make people understand the economic situation. The head of the central bank should be allowed to communicate frequently with the president and function as a source of government policy, although it has not been that way in the past.
The central bank has not been treated properly in the process of policymaking or in personnel appointments. When President Roh Moo-hyun and the governor of the central bank respect and understand each other, they can harmoniously establish financial policies.
Seoul National University professor Chung Un-chan, who declined to accept the position of the governor of the central bank when the people’s government under former President Kim Dae-jung was launched, once said he could not accept such an important position when he did not know what kind of financial policy the president was seeking and what ideas the president had on the role of the central bank.
There has never been an effort made to establish the responsibilities that the governor of the Bank of Korea and the president have between each other.
This has led to the weakening of the central bank, which caused many misfortunes. Even during the past few years, the central bank has not taken a strong approach to stop the excessive financial support given to start-up companies and the reckless over-issuing of credit cards.
The same goes for the excessive cash flow problem and sudden surge in real estate prices. In deciding the interest rates and foreign exchange policies, the central bank made problems grew bigger with poor timing.
A proper head of the central bank would have issued a warning in advance or come forward to take care of problems, but the governor at the time either didn’t know the problems or never bothered to do anything about them. Perhaps he treated the situation lightly, or thought it was not the job of the central bank governor.
The head of the central bank needs to speak up when it is really necessary. In order to do so, he should not talk a lot in ordinary times. That is why I have high expectations for the new head of the central bank, because he has prominent experience.
Putting other things aside, it would be a big success if he could precisely inform the president of the economic situation, including the price of real estate. More frequent persuasion may be necessary because the pressure on the financial sector will grow higher with the local and presidential elections upcoming.
Many people are frustrated because the central bank has been pushed back so often. Former heads of the bank made some critical remarks only around the time they retired from their posts. It would be more effective if they could comment regularly to the president.
It is not efficient to insist on the view of the central bank only and fight against the government head-on.
The important thing is to have the strategy and the skill to make policies rather than shouting out the independence of the Bank of Korea.
The governor of the Bank of Korea shouldn’t forget his own job by getting entrenched in the government’s policies, but it would also be a problem if he got too rigid or failed to work together with others.
This is the point that is most worrisome about the new head of the Bank of Korea, who is known as an orthodox Bank of Korea man who sticks to the principles and emphasizes the pride and independence of the central bank.
A weak point at the beginning can be a strong point, and a strong point can become a weak point.

* The writer is a columnist for the JoongAng Ilbo. Translation by the JoongAng Daily staff.


by Choi Woo-suk
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