On the 3rd, Bank of Korea Governor Lee Chang-yong said, “I thought it was a deepfake video” after seeing President Yoon Seok-yeol’s public address declaring martial law.
On the 12th (local time), in an interview with the British current affairs weekly The Economist, Governor Lee said, “I thought the broadcasting station had been hacked.” Regarding President Yoon’s declaration of martial law, he described it as “an unnecessary and unimaginable mistake” and “an embarrassment.”
He emphasized that political instability, such as martial law, has little impact on the economy. Governor Lee said, “(The Korean government) has a mechanism to handle economic issues unrelated to political issues.”
As concerns about the domestic economy grew abroad, with the won-dollar exchange rate exceeding 1,430 won after the martial law situation, Governor Lee began to alleviate anxiety through interviews with foreign media. In an interview with Bloomberg on the 5th, governor Lee also said, “Despite the martial law situation, the financial market is operating normally.” In an interview with the Financial Times (FT) published on the 6th,it was also stated that “the economic impact of the domestic political crisis is limited.”
Governor Lee has been holding ‘F4’ meetings every day since the martial law incident on the night of the 3rd with Deputy Prime Minister and Minister of Strategy and Finance Choi Sang-mok, Financial Services Commission Chairman Kim Byeong-hwan, and Financial Supervisory Service Chairman Lee Bok-hyun and has continued to inspect the foreign exchange and financial markets. The government and the Bank of Korea plan to monitor financial and foreign exchange market conditions 24 hours a day and continue market stabilization measures such as unlimited liquidity supply.
Reporter Lee Dong-hoon [email protected]
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What were the Governor’s main concerns regarding the declaration of martial law in South Korea?
Interview Transcript: Time.news with Bank of Korea governor Lee chang-yong
Time.news Editor (TNE): Good afternoon,Governor Lee,and thank you for joining us today. Your recent comments regarding President Yoon Seok-yeol’s declaration of martial law have sparked significant discussion.Can you elaborate on your initial reactions when you first encountered the announcement?
Governor Lee Chang-yong (GL): Good afternoon. Thank you for having me. When I first saw the announcement, I must admit my initial thought was that it might have been a deepfake video. The situation seemed so outlandish that I believed the broadcasting station could have been hacked.
TNE: That’s quite a surprising reaction. You’ve referred to the declaration as “an unnecessary and unimaginable mistake.” could you clarify why you view it that way,particularly in the context of the economic climate in South Korea?
GL: Certainly. The declaration of martial law is an extreme measure,and in this case,it appeared to be a reaction to political unrest rather than a necessity. From my perspective, such measures create needless fear and uncertainty, which can ripple through the economy. However, I want to emphasize that while political instability can be alarming, it doesn’t fundamentally disrupt economic mechanisms.
TNE: You mentioned in interviews that political issues have little impact on economic conditions.can you explain how you differentiate between the two in practice?
GL: What’s crucial is that institutions like the Bank of Korea function independently of political noise. We have established protocols to manage economic issues, regardless of political circumstances. As an exmaple,despite the martial law situation,the financial markets continue to operate normally,and we’ve taken steps to ensure liquidity is available to prevent disruptions.
TNE: That’s reassuring to here. Considering the won-dollar exchange rate exceeding 1,430 won recently,what measures is the government and the Bank of Korea taking to stabilize the financial markets?
GL: We have been actively monitoring the foreign exchange and financial markets,engaging in what we call ‘F4’ meetings daily with key financial leaders to assess the situation. Our strategies include 24-hour monitoring of market conditions and ensuring there is unlimited liquidity supply when necessary. The goal is to assuage uncertainties and maintain confidence in our financial system.
TNE: It truly seems like a significant commitment to market stability. Looking ahead, what do you see as the main challenges for the South Korean economy in the near future, especially considering this political backdrop?
GL: The primary challenge remains global economic conditions, including inflationary pressures and geopolitical tensions. while political disruptions have proven manageable, we always remain cautious about external shocks. It’s vital for us to stay vigilant and proactive to ensure the continued resilience of our economy.
TNE: Thank you for sharing your insights, Governor Lee. It’s evident that you and your team are working diligently to navigate these tumultuous waters. Do you have any closing thoughts for our audience?
GL: I appreciate the opportunity to discuss these critically important issues. I want to reassure both domestic and international audiences that the Bank of Korea is committed to maintaining stability and openness during these challenging times. Together, we can navigate this period effectively.
TNE: Thank you again, Governor Lee, for your time and perspectives. We look forward to your continued guidance and insights in the future.