A coordinated effortFinance Minister Yoon Jeung-hyun and new Bank of Korea Governor Kim Choong-soo reportedly met Monday to exchange their opinions on the current economic situation.
We are thankful that such a meeting was arranged right after the appointment of the new BOK governor. We also hope that the meeting will provide a turning point for the government and the central bank to put aside any conflicts or dissonance from the past and establish a new relationship of cooperation and coexistence.
The Korean economy has overcome the global financial crisis and now stands at a crossroads of revival or no revival. However, there are more than one or two obstacles in the way of the Korean economy until it can safely position itself on a stable growth track.
The first problem is how to set the foundation for a strong macroeconomy. If the frame of the macroeconomy fails, it not only makes recovery of growth and employment difficult, but also weakens the effects of microeconomic policies such as restructuring or a solution to an aging society.
The two wheels that support the macroeconomy are budget and finance, the respective responsibilities of the government and the Bank of Korea are responsible. If the two wheels do not roll together in harmony and instead squeak in imbalance, the cart of the Korean economy cannot roll forward properly either. This is why cooperation and coexistence of the two organizations is a more pressing matter than ever.
No doubt close communication is a prerequisite for smooth cooperation and coexistence. Therefore, the heads and workers of the Ministry of Finance and Bank of Korea need to frequently meet and candidly share their opinions with each other. They must also communicate on the macroeconomy and try to relieve any conflicts of opinion at these meetings. This is necessary to prevent any more unfortunate friction between the government and Bank of Korea.
Another precondition of cooperation and coexistence is trust. Trust cannot exist if the two groups do not recognize each other’s independence and sovereignty.
First of all, the Ministry of Finance needs to refrain from talking about monetary policy, which belongs to the Bank of Korea. Public statements on interest rates by government spokespersons also damage the independence of the central bank and help build mistrust in the two government organizations.
The Bank of Korea, too, needs to break away from its egoism and gain an attitude of cooperation with government policies on a broader level. Discussions on exit strategy will be a critical test of cooperation and coexistence between the two bodies.