The Bank of Korea puts more weight on financial stability in next year’s monetary policy management. In case the economic slowdown intensifies, we will also review ways to use policy tools other than interest rates, and initiate preliminary work in preparation for the issuance of central bank digital currency (CBDC).
The Bank of Korea announced on the 25th that, in the ‘2021 Monetary Credit Policy Operation Direction’, “while maintaining the monetary policy easing stance, we will be more cautious of the risk of financial imbalance due to the prolonged monetary easing stance.”
In the general principle of the operation of the monetary credit policy for next year, the BOK stated, “In the event of financial instability, the spread of monetary policy may be limited and the stability of the macroeconomic may be hindered. ‘Efforts to stabilize financial markets’ were newly stated.
Specifically, the plan is to pay more attention to the possibility of a financial imbalance, such as an inflow of funds into the asset market and an increase in household and corporate debt, while the easing financial conditions continue during the monetary policy operation process.
The BOK said, “In addition to taking into account the impact of the government’s housing and macroprudential policy on the flow of money to the asset market such as housing, the rise in household and business loans, etc., volatility in price variables and capital inflows will vary according to changes in financial market risk factors As it can be expanded from time to time, we will closely examine the impact of the development of internal and external uncertainty factors on risk preference and global investment flow.”
Read more: https://www.en24news.com/business/en/2020/12/the-bok-focuses-on-next-years-monetary-policyfinancial-market-stability-cbdc-issuance-preparation-accelerationen.html