[KS] Central Bank independence in Korea

[KentDavy]

Bernhard Seliger  wrote :

Dear List members, 

since the revision of the revision of the Bank of Korea Act in December
31, 1997, the Bank of Korea enjoys legal independence under a single,
dominant goal - price stability - with a formulation very close to
similar stipulations in the European Union's or the former German
Deutsche Bundesbank law. Both - independence and price stability as the
main goal - were parts of IMF conditionality. 


However, how far is the Bank of Korea de facto able to make decisions
independently from government? 


I found in the daily press numerous instances of government pressure,
open conflict between government and BOK and common decision making in
informal committees. 


However, I would be interested in a review of these questions, academic
or newspaper articles  and additional data. 


I think this question is also interesting for the list, since it is a
detail in the broader question, inhowfar the change of formal
institutions after the crisis of 1997 resulted in conflict with informal
institutions and decision-making processes or how much the informal
processes also changed. <mailto:changed. at maincc.hufs.ac.kr>   


  


Somewhat on point: 


An expat colleague -- the credit risk manager at a major international
banking institution -- recently attended one of the creditor meetings
convened by KEB in its capacity as the lead creditor bank for dealing
with Hynix under the recently enacted Corporate Reorganization Promotion
Law.  This law was described by DPM/MOFE Jin Nyum in a public forum with
members of the EUCCK as intended to let "market forces operate"; in fact
it is a rather blunt, but in some ways quite subtle, instrument to
"force the market" to operate in ways that are consensually decided
behind the scenes.  The curtain came away from the wizardry at the Hynix
creditor meeting.  First, the powers that be tried to exclude my
colleague -- the only non-Korean present -- from the meeting on the
ground that only one representative from each bank was permitted (he was
accompanied by another colleague acting as his interpreter).  Having
been unable to overcome my friend's recalcitrance,  KEB then (rather
surprisingly) nevertheless kicked off the meeting with a statement to
the effect that all the banks should support the latest lunatic bailout
proposal for Hynix regardless of the credit analysis because it was the
necessary thing to do "for Korea".  Old habits don't die; maybe they'll
fade away, but only if, like the originator of that trope they're pushed
-- vigorously.

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