Juyeol Lee: Inaugural address
Inaugural address by Mr Juyeol Lee, Governor of the Bank of Korea, Seoul, 2 April 2018.
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(The following is an unofficial English translation of the inaugural address of Juyeol Lee, the
Governor of the Bank of Korea.)
My dear fellow Bank of Korea staff!
Today I begin my second term as Bank of Korea governor. This is not only a great honor for me
personally, but from the standpoint of our organization as well I think it has a very deep meaning
in serving to honor the Bank of Korea's neutrality and the autonomy of its monetary policy. At first
I considered beginning my new term without holding any event at all, but for the purpose of
reflecting together with you all on this meaning, and newly resolving ourselves for the work ahead
of us, we are having this inaugural ceremony, even if it is only a simple one.
First, let me express my heartfelt appreciation to our Monetary Policy Board members, who have
given their all in our establishment and operation of monetary policy even under the harsh
conditions that we have faced over the past four years, and to our executives and staff, who have
faithfully carried out the duties assigned to them under these conditions as well.
My fellow Bank of Korea staff!
Recently our domestic economy, as well as economies overseas, have been growing solidly,
and it is forecast that these trends will persist going forward as well. But I think that the
uncertainties surrounding our economy now are greater than at any other time before.
Already this year financial markets worldwide have been shaken to considerable extents, in line
with the monetary policy normalizations in major countries and the movements toward
strengthened trade protectionism. In Korea structural problems have also built up, owing to our
low birthrate and population aging, income imbalances, dual labor market structure and
accumulated household debt. All of these are factors that can undermine the stability of our real
economy and financial system.
In severe conditions like these, we will need to equip ourselves with strong senses of
responsibility and mission, and ponder deeply the directions appropriate to our future policy
operations. And as I begin my second term here today, I would like to talk from now on about the
tasks that I plan to focus on pushing ahead with.
First, while working to sustain the momentum of the economic recovery, we will also have to
operate our monetary policy so as to ensure that financial system stability can be maintained. As
we continue our monetary policy accommodation to support our economy's trend of growth, and
closely examine changes in real economic and financial stability conditions, we will need to judge
carefully the necessity of any adjustment in the degree of accommodation. In this process we will
have to devote special care to making sure that potential financial system risks, such as the
buildup of household debt and the possibility of capital outflows, do not materialize. In order to
operate our monetary policy effectively, accurate assessment and forecasting of financial and
economic conditions are essential. And on the basis of this we will have to maintain consistency
in our policy-making, while formulating the directions for our monetary policy operations from a
medium-term perspective and communicating on them with the market.
While devoting efforts to the efficient operation of our monetary policy, we will not hesitate to
provide advice on pending economic issues overall. Short-term policy responses to the risks
facing us mentioned earlier are of course important, but when looked at from a long-term
perspective I believe that the work of resolving the structural vulnerabilities in our economy is a
task that cannot be delayed any longer. Through in-depth research we will have to precisely
diagnose the urgent economic issues before us, seek viable responses to them, and
consistently propose these to the policy authorities.
To enhance our monetary policy's effectiveness we will need to reconsider our policy framework
and instruments. Taking into account the changes in the relationship between growth and prices,
as well as the importance of the central bank's role in financial stability, we will have to deliberate
deeply on measures to facilitate efficient operation of our inflation targeting system. Since there is
a possibility that, together with the drop in our potential growth rate, the scope for our Base Rate
operations will become narrower than previously, it will be necessary from a medium- to
longterm perspective to also devise measures for securing our policy capacity.
We will have to respond actively to the changes in our financial environment due to the
developments of fintech and new technologies such as Blockchain. Technological innovation
these days is so rapid and complex that it is difficult to compare it with past cases. These
changes do bring to us new opportunities and convenience, but they can also lead to
unanticipated risks and also threaten our financial system's stability. We will have to strengthen
our research on the impacts that digital innovation is having on the real and financial economies,
while at the same time also participating actively in the international discussions in this regard.
Fellow members of the Bank of Korea!
In starting my first term four years ago I immediately launched the 「Management Improvement
T/F」, which promoted the heightening of our work efficiency. Since then we have continued our
efforts to raise our staff's sense of accomplishment and strengthen the capacity of our
organization as a whole, but it is true that there are still inadequacies in our management
practices that will have to be improved upon going forward. If we say that in operating our
organization over the past four years we have put 'stability' first, then during the next four years
we will place our focus on 'change and innovation.' To this end we will reassess, from the
present day's perspective, the various systems and practices related to internal management at
our Bank, and build upon the parts of our heritage that are worth preserving while proactively
seeking to change practices that are either obsolete or in need of improvement.
To speak a little more concretely here, we will have to aggressively clear away any inefficiencies
in our work process, and heighten our productivity. Precious time and resources should not be
wasted in unnecessary processes or practices. Through the delegating of authority to lower
levels of staff, the simplification of our reporting process, and the minimization of task overlaps
across departments, we will strive to enhance the efficiency of our work process and
decisionmaking system. I think that this is also important in order that staff be able to strike a 'balance
between work and life.'
And if we want these efforts to bear the intended fruit, then smooth communication between high
and low level staff members, between colleagues, and between departments is essential.
Together with this, through personnel management based on objective criteria for assessing
performance and ability, we will ensure the reinvigoration of our organization.
My fellow Bank of Korea staff!
In circumstances where domestic and overseas economic conditions are severe like this, I think
that the public expectations for the central bank are higher than at any other time. And in order for
the Bank of Korea to be able to satisfy these public expectations, all staff will need to gather
themselves, with new determination, and strive to fulfill their individual responsibilities. In
connection with this, I think that at this point in time it is crucial to have an open attitude of
willingness to listen to healthy criticisms or opinions from outside. I always stress that we must
be ever vigilant against the possibility of delays in our development as a result of homogeneous
thinking. And this is why we must carry out our duties with more adventurous attitudes, and also
why increasing the diversity of our organizational composition is appropriate.
In order to become a central bank trusted by the public, as is our vision, we must live up to the
public's high expectations not only in our policy operations but also from the perspective of our
morality. Our individual staff members will have to maintain their dignities as central bankers.
Slackness in complying with our principles and regulations in the execution of our duties is
unacceptable.
Dear Bank of Korea executives and staff!
Let us all, as central bank employees, be resolute in our purpose of contributing to the
development of our national economy, and while cooperating and communicating actively with
each other exert ourselves to the utmost in fulfilling the responsibilities that we are entrusted with.
Thank you.