Lessons from Macro-Financial Policy in Korea: A Discussion

Hwanseok Lee

Chapter 23 in Macro-financial Stability Policy in a Globalised World: Lessons from International Experience:Selected Papers from the Asian Monetary Policy Forum 2021 Special Edition and MAS-BIS Conference, 2023, pp 470-478 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Korea’s experience of the past several decades shows that the transmission channel of external shocks continually shifts along with the sectors where financial regulation is weak. At first, during the Asian Financial Crisis, the channel ran through the currency and maturity mismatches on firm and bank balance sheets, and it later shifted to banks’ excessive short-term external borrowing during the global financial crisis. The COVID-19 shock in 2020 shows that the vulnerability is now located in non-bank financial institutions (NBFIs) and their foreign portfolio investment. In the aftermath of each crisis, the Bank of Korea and the Korean government made efforts to improve the macro-financial policy framework; thus, the current framework can be best understood as the historical result of these continuous responses against shifting vulnerabilities…

Keywords: Macro-financial Policy; Policy Framework; Macroprudential Policy; Monetary Policy; Fiscal Policy; Capital Flow Management Measure; Capital Control; Foreign Exchange Intervention; Integrated Policies; Multiple Policies; Policy Trade-off; Policy Substitute; Policy Complement; Policy Interaction; Policy Space; Central Bank; International Spillovers; Spillbacks; Sending Country; Receiving Country; Financial Channel; Financial Regulation; Financial Stability; External Stability; Advanced Economy; Emerging Market Economy; Capital Flow; Portfolio Flow; Banking Flow; Exchange Rate; Banking System; Non-bank Financial Institution; United Kingdom; Sweden; China; Hong Kong Sar; India; Indonesia; Korea; Singapore; Latin America; Croatia (search for similar items in EconPapers)
JEL-codes: E E52 E58 E6 F F01 F3 F38 (search for similar items in EconPapers)
Date: 2023
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