Market Update: President Lee taps BIS monetary head Shin Hyun-song to be next BOK governor – Full Analysis

 

President Lee Jae Myung on Sunday tapped Shin Hyun-song, head of the Monetary and Economic Department at the Bank for International Settlements (BIS), as the new governor to lead the Bank of Korea (BOK).

 

The Blue House described Shin as a figure who possesses both academic depth and practical insight in the fields of international finance and macroeconomics.

 


 

“He is a globally recognized authority in international finance and macroeconomics, possessing both deep academic expertise and practical insight,” said Lee Kyu-youn, senior presidential secretary for public relations and communication, in a briefing. “At a time of heightened global economic uncertainty driven by developments in the Middle East, he is the right person to achieve the dual goals of price stability and national economic growth through monetary policy,” Lee added.

 

Born in 1959 in the southeastern city of Daegu, Shin graduated from Emanuel School in Britain and earned a doctorate in economics from Oxford. He was the Hughes-Rogers Professor of Economics at Princeton University and also held appointments at Oxford University and the London School of Economics.

 

The nominee additionally served as a resident scholar at the International Monetary Fund (IMF) in 2005 and as a member of the financial advisory council at the Federal Reserve Bank of New York in 2006. He also served as senior adviser to then-Korean president Lee Myung-bak in 2010, taking a leading role in formulating financial stability policy in Korea and developing the agenda for the Group of 20. He is set to retire from his role at the BIS in April.

 

In response to concerns over his limited understanding of domestic conditions, Lee said that Shin has “consistently shown interest in domestic monetary policy and has frequently participated in seminars and delivered lectures.” He added, “As shown by the Middle East situation, domestic and global economic environments can no longer be separated, and in this context, his expertise is expected to stand out.”

 

Shin is characterized as a hawkish figure who supports pre-emptive interest rate hikes and has cautioned against excessive liquidity. He is also recognized as an expert on central bank digital currencies (CBDCs), which have emerged as a key issue shaping the finance sector. In November of last year, he copublished a paper titled “Competing Digital Monies” that argued a CBDC can contribute to increasing financial inclusion and improving social welfare even if they can lead to some degree of disintermediation.

 

Citizens refuel at a gas station in Yongin, Gyeonggi, on March 22. The nationwide average retail price of gasoline at gas stations in the third week of March fell by 72.3 won per liter (18.2 cents per gallon) from the previous week to 1,829.3 won, according to the Korea National Oil Corporation’s fuel price information system. [NEWS1]

 

Shin’s appointment comes at a time of heightened economic complexity, including surging oil prices and the resulting inflationary pressures that could weigh on the central bank’s interest rate decision.

 

The BOK has kept the benchmark interest rate at 2.50 percent for sixth consecutive meeting in February and signaled the rate would stay in that range over the next half year, while noting concern over volatility in the dollar-won exchange rate and robust exports led by the IT sector, including semiconductors.

 

In March, the dollar–won exchange rate repeatedly breached the psychological threshold of 1,500 amid escalating tensions linked to the Iran war, at one point closing above that level on Thursday for the first time since the global financial crisis 17 years ago.

 

Other economic concerns include the polarized growth noted by current BOK Gov. Rhee Chang-yong, with expansion centered on the IT sector while non-IT sectors grow below their potential. This is expected to widen the gap between IT and non-IT industries, as well as exacerbate the uneven gains among stock investors.

 

Shin will go through an appointment process, including a parliamentary confirmation hearing, for the role, which carries with it a four-year term. Rhee’s term as BOK governor ends on April 20.

 

 

BY JIN MIN-JI [[email protected]]