Bank of Korea Governor Rhee Changyong stated, "AI should be the first to detect fake news through artificial intelligence (AI) monitoring." He emphasized the need to establish a rapid monitoring system to respond to the malicious spread of false information that could trigger a bank run, following project financing (PF) losses amounting to around 1 trillion won at OK Savings Bank and Welcome Savings Bank.
On April 13 (local time), Governor Rhee made these remarks during a meeting with accompanying journalists in Washington, D.C., where he was attending the G20 Finance Ministers and Central Bank Governors Meeting. He explained, "Due to the recent Silicon Valley Bank collapse in the United States, many central banks around the world are now considering how to adapt their regulations and deposit protection systems in the digital economy."
He went on to say, "In Korea, internet banking is so advanced that transferring around $10,000 is extremely easy. If a situation similar to the Silicon Valley Bank incident were to occur, deposit withdrawals could happen even more quickly. If fake news spreads via social media, it must be addressed swiftly."
He also mentioned the need to enhance the deposit insurance system. In the event of insolvency at a small bank, it is necessary to speed up the payout of insured deposits. Governor Rhee expressed concern, saying, "When a problem arises at a small bank, it currently takes a long time for the Korea Deposit Insurance Corporation to return deposits. In the past, it took two to three days for people to withdraw their deposits during a bank run, but now it takes only two to three hours."
Governor Rhee added, "In the digital era, more than half of central bank governors are concerned not only about insurance systems and limits, but also about how quickly payouts can be made and how to suppress fake news. If fake news emerges, as it did just yesterday, there must be swift and stern action to eliminate factors that could disrupt financial markets." He indicated that preventing the spread of fake news on social media has become a new challenge.
In addition, he stressed the need for government intervention in market interest rates. Governor Rhee expressed concern that a widening gap between deposit and loan interest rates could increase the burden and hardship for vulnerable groups. He explained that, in the long term, the loan market, which is currently dominated by variable interest rates, should transition to a fixed-rate system. Governor Rhee said, "Given the structure of our financial system, the gap between deposit and loan rates tends to widen when interest rates rise, because most loans have variable rates. It is only natural for the government to provide guidance or requests to narrow that margin. From a long-term systemic perspective, we need to consider how to shift from a variable-rate system to a fixed-rate system."
Regarding recent media reports that he told Financial Supervisory Service Governor Lee Bokhyun during a closed-door meeting on macroeconomic and financial issues not to adjust interest rates too microscopically, Governor Rhee once again clarified that these reports were inaccurate. He said, "I do not know where the story that I told him not to make micro-adjustments came from."
On inflation and interest rate outlook, Governor Rhee said, "We expect the inflation rate to be around 3% by the end of this year, but there is uncertainty in the second half. There is a threshold of 3% before we reach 2%, so it is premature to talk about 2%. It is highly uncertain to say that interest rates will be lowered soon." He explained that even if the current policy of holding the base rate is maintained, the likelihood of a rate cut before the end of the year is very low.
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