The purpose of this research is to look at how Korea’s financial policy is operated and seek policy alternatives for further improvements.
There are several reasons why the current Currency Management Policy is not effective. First, due to the goal oriented currency management, there is low confidence in the policy; second, supply chain for currency by sector is not well managed; and last, M2 is less useful as a central currency indicator. To improve the policy, the currency indicator should be analyzed based on the circulation of currency, trend in the financial sector, loans, and currency trends by sector. Also, rather than direct regulation, currency management policy should change to more practical and indirect regulation. Moreover, it should consider integrated management towards liquidity of non-monetary institutions.
Issues with current policy on interest rate include rigidity in rate determination, gap between the real interest rate and the rate set by the government, lack of relationship of the interest rate, and low loan-deposit margin. In alignment with economic trends, it is desirable to reorganize the structure of decision making so that interest rates are being adjusted often, improve current operation, and implement a system where the interest rates are different when giving and receiving loans. Furthermore, it is recommended that the level of the interest rate is fixed and the role of financial institutions in making decisions on actual interest rates is increased; the gap between the bank interest rate and non-monetary institution’s interest rate is decreased based on time and credit ratings. Also, the interest rate set by the Bank of Korea should work as a base rate.
The loan policy can be divided into two parts, policy on selective financing and maintaining prudent financing, and it is important to decrease the policy financing and solve the issue where the financial institution’s loans are concentrated on major corporations, large cities, export industries, heavy and chemical industries, and construction industries. The excessive debt by financial institutions should be kept down by solving existing debt at the same time expanding responsible corporate management system, evaluation system and improving audit policies.
There are many changes to be made in the financial industry system; increase competition by encouraging financial institution’s freedom, change from quantitative to qualitative policy management, secure relationship between financial institutions and its fairness, role division amongst financial institutions that are in charge of the policy, and improve the role of financial supervision.
우리나라 금융정책 운영현황과 개선방안
실제 운영행태를 중심으로
[서울] : 한국개발연구원
|Series Title; No||연구보고 / 87-03|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Financial Policy|
|Holding||KDI; KDI School|