Lee Chang-yong, Governor of the Bank of Korea, who opposed universal support for all citizens, maintained his stance on the selective support for the livelihood recovery funds proposed by the government and ruling party on the 18th. However, he acknowledged the need for the introduction of a won stablecoin, contrary to his previous position, mentioning that further discussions should be held.
During a press briefing on the status of the inflation target operation held in the Bank of Korea's annex in Jung-gu, Seoul, the governor said, "It is difficult to evaluate because I have not seen the contents of the supplementary budget proposed by the government and ruling party," but added, "From the perspective of financial efficiency, it is more efficient to provide selective support to struggling self-employed individuals and others rather than universal support."
Earlier this year, Lee publicly expressed his opposition to the 250,000 won livelihood support proposed by the then-opposition Democratic Party of Korea, noting the necessity of selective support for the self-employed and small businesses. It seems he has maintained the same position regarding the livelihood support announced that day.
On that day, the Democratic Party stated that it would uphold universal support as a principle but would provide additional support to vulnerable groups. The government and ruling party are reportedly considering a plan to grant 250,000 won to the general public as livelihood support, while providing 500,000 won to basic livelihood recipients, 400,000 won to the near-poor and single-parent families, and 150,000 won to the top 10% income earners.
He evaluated the second supplementary budget proposed by the government and ruling party neutrally. He first diagnosed that the supplementary budget would have a minor impact on prices. In this regard, Deputy Governor Kim Woong noted that assuming the scale of the second supplementary budget is around 20 trillion won, "the timing of budget execution could be delayed, so its impact on prices this year will be limited, but it will affect prices next year," adding that "it would result in a 0.1 percentage point increase in the inflation rate."
Regarding the effect of enhancing the growth rate, he stated that he would study it once a specific plan is confirmed. The governor said, "I do not know the details since I have not seen the supplementary budget," adding, "The multiplier effect varies based on how the funds are used, so I cannot assess the effect at this time. I will research the effect on the growth rate after confirming the details and share it around the time of next month's monetary policy direction meeting."
However, the governor expressed a more relaxed stance regarding the won stablecoin that the ruling party has been aggressively promoting recently. He stated, "The Bank of Korea does not oppose the issuance of the won stablecoin, recognizing its necessity," but emphasized that discussions need to be held on regulation methods as the exchange between dollars and won might easily occur through stablecoins, leading to difficulties in foreign exchange management.
He expressed strong concern until last year that the spread of stablecoins could undermine the singularity of currency and impact the seigniorage of currency issuance and the effectiveness of monetary policy. He has been at the forefront of advocating for the introduction of a stablecoin referred to as Central Bank Digital Currency (CBDC). However, as discussions surrounding the won stablecoin have accelerated recently, the tone of the governor's remarks has also eased.
He reiterated his existing concerns about the rise in real estate prices. The governor stated, "In the provinces, the supply is abundant, causing real estate prices to fall, while in the metropolitan area, the expectation is forming that there will be insufficient supply for the next few years, leading to rising house prices," adding that "managing consumer expectations is of utmost importance."
He stated, "To manage expectations, supply measures for the metropolitan area must be established, and the Bank of Korea should not make the mistake of excessively providing liquidity that amplifies expectations," and emphasized the need for reflections on ways to reduce the tendency of young people to flock to the metropolitan area, stating that structural reforms should be accompanied by both short- and long-term policies.
Regarding future price projections, he diagnosed, "The inflation rate is expected to stabilize at around 2%." However, he pointed out that the cumulative rise in prices keeps the price level itself high. The governor remarked, "Consumer prices have risen by over 15% and living costs have increased by nearly 20% over the past five years," emphasizing that "the price level is not something all citizens may consider stable."