Why BOK chief calls for fewer SNU students from Gangnam

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Why BOK chief calls for fewer SNU students from Gangnam

Published: 25 Sep. 2024, 17:35 Updated: 25 Sep. 2024, 19:21

SHIN HA-NEE
shin.hanee@joongang.co.kr

Bank of Korea Gov. Rhee Chang-yong speaks during a press conference following a Monetary Policy board meeting July 11 at the central bank in Jung District, central Seoul. [JOINT PRESS CORPS]

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Higher education is not commonly an area where the Korean central bank weighs in, but Bank of Korea (BOK) Gov. Rhee Chang-yong threw his hat in the ring last month by advocating that a region-based admissions quota would help curb sky-high housing prices in affluent neighborhoods.

It was not the first time that the governor made headlines with strong comments far outside the realm of monetary policy — a practice rarely seen from his predecessors. The traditionally reserved central bank has become increasingly and unprecedentedly vocal on some of the most divisive issues within Korean society, a change that some welcome and others reject.

The education frenzy behind soaring housing prices

In an interview with the Financial Times released Tuesday, BOK Gov. Rhee blamed Korea’s overly competitive education system for excessive housing prices in the capital, calling for “drastic solutions” to drive people away from the highly populated Seoul area.

The comment echoed a statement the chief central banker had made on Aug. 27 when the BOK published a report urging top universities to impose regional admissions quotas that would require them to admit a designated number of students from certain areas of the country based on the population of those areas.

Rhee blamed "the constant presence of excessive demand on properties" for high real estate prices in the greater capital region, and especially southern Seoul, at a symposium on Aug. 27.

“Endless demand, fueled by education frenzy, solidified the idea that real estate investments in the southern Seoul region would never fail,” said the governor, adding that “a decision by faculty at Seoul National University, Yonsei University and Korea University can provide an opportunity to make a huge impact and break away from harmful equilibrium, even without any legislative revisions or government policies.”

Reactions to the bold proposal have been mixed at best, with critics pointing out that the suggestion lacks practical feasibility.

“Such measures would be almost impossible to implement especially at private universities,” said Park Joo-ho, an education professor at Hanyang University. “As decisions regarding admissions are at the discretion of each university, enforcing a quota would infringe on their autonomy.”

The central bank, a national think tank

The BOK has never been this vocal or controversial, as it continues to weigh in not only on university admissions, but also on contentious structural reforms such as the expansion of agricultural imports and a separate wage system for foreign workers.

Rhee is intentionally spearheading that shift, aiming for the central bank to bolster its role as "the country's best think tank,” as said in his inaugural address, and become “an intellectual leader that contributes to the establishment of new policies for central and local governments and assists decision making for the private sector.”

The central bank has been rolling out reports much more frequently since Rhee took the helm, occasionally sparking backlash.

For example, a report calling for increased agricultural imports in order to reduce food prices faced criticism from within the government, with Agriculture Minister Song Mi-ryung saying that the proposal “took only inflation into account, without considering the uniqueness of the agricultural sector or its significance on the national level.”

However, Rhee remains firm in his belief that the BOK should continue to offer its input on structural issues, which “have been accumulating for decades and now restrict [the BOK’s] options on macroeconomic policy decisions.”

Kim Yeong-ik, an economics professor at Sogang University, believes that "floating new ideas to improve the structural system is a positive move.

"Presenting diverse opinions is desirable; these are suggestions that can be debated, ultimately helping find new directions,” said Kim. "The act of putting them forward is beneficial, as it starts public discourse.”

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]