President Lee Ju-yeol, who responds to the list▶ Click here to enlarge
On the 23rd, Governor Lee received related questions at a general meeting of the National Assembly’s Planning and Finance Committee and said, “It is not desirable for the BOK to directly take over government bonds issued by the government.” “The monetization of government debt” caused controversy, and that was because concerns about fiscal soundness, undermining the trust of the central bank, and external rookies were also negatively affected.”
He added, “In other major countries, the central bank’s acquisition of government bonds (directly) is prohibited by law, and in Korea, there is no case of directly taking over government bonds since 1995,” he added.
Lee Ju-yeol, President of the Bank of Korea▶ Click here to enlarge
The’Special Bill on Loss Compensation and Win-Win Growth for Overcoming Coronavirus Infectious Diseases’, recently initiated by Democratic Party lawmaker Min Byeong-deok, issuing government bonds to finance the loss compensation and condolence money related to Corona 19. It contains content that is directly acquired by the issuing market.
However, Governor Lee expressed his intention to be more active in purchasing government bonds through the’distribution market’, which is the BOK’s usual currency management tool.
He said, “(Bank’s) KTB purchase reports the market supply and demand situation and interest rates. Unlike before, this year, the volume of issuance of government bonds is expected to expand significantly more than in previous years, so we will fulfill the role of the BOK to stabilize the market.” Revealed.
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