Labor union claims Kim’s plan compromises central bank’s independence


Bank of Korea Gov. Kim Choong-soo has come under fire from the bank’s labor union on Wednesday, offering a painful glimpse into the internal division and distrust that could generate more public doubt about its policy decisions.

The BOK labor union issued a statement in the afternoon, attacking its own governor over his alleged decision to recommend a non-BOK figure to the No. 2 position at the central bank.

“According to a recent news report, Gov. Kim Choong-soo has recommended the current director of the Economic Research Institute to Cheong Wa Dae as a candidate for the next senior deputy governor,” the union said. “If true, this is an unprecedented move for the Bank of Korea and cannot be accepted.”

The dispute is part of the drawn-out internal tension between BOK employees and Gov. Kim, who himself built up his career outside of the bank before getting appointed to the top post.

Prior to his appointment in April 2010, Kim worked as director of the state-run Korea Development Institute from 2002 to 2005 and briefly served as senior presidential secretary for economic affairs during the early period of the Lee Myung-bak administration.

At issue is that Kim reportedly recommended Kim Jun-il, the current head of the BOK’s economic research arm, as a leading candidate for the bank’s next deputy senior governor. Kim Jun-il worked as the chief of KDI’s macro economic team and Gov. Kim brought him to the central bank, so both Kims are regarded as outside figures who belatedly joined the top bank in Korea.

The senior deputy governor and other key positions on the powerful Monetary Policy Committee are set to be replaced in April as their terms expire.

“If the senior deputy governor, in addition to the governor and auditor, come from outside, the central bank’s independence will be compromised further,” the union said, adding that the post in question should be filled by a person who has a firm grasp of the bank’s organization culture and employees.

The union went on to criticize Gov. Kim’s close ties with the administration.

“Gov. Kim has put too much emphasis on the policy coordination with the administration, which generated serious concerns about the bank’s independence, and he is also under criticism for the runaway inflation.”

It has long been customary that BOK appoints a top-ranking official who has been trained at the bank as senior deputy governor. Gov. Kim’s decision to promote Kim Jun-il, who is deemed a KDI-trained figure by BOK employees, goes against the longstanding practice.

Gov. Kim has brought many changes to the central bank after taking office, some of which sparked disputes. He often offered exclusive interviews to foreign media while refusing to talk to Korean news outlets. He also pushed ahead with the introduction of a regular policy coordination meeting with the Finance Ministry despite concerns that such meet-up undermines the BOK’s independent rate-setting decisions.

By Yang Sung-jin (insight@heraldcorp.com)