[Gwanga in] Why the speculation about Lee Chang-yong as Deputy Prime Minister?... Stirring the Bank of Korea

Ahead of April General Election Next Year, Deputy Prime Minister and Others Replaced One After Another

Lee Chang-yong, Governor of the Bank of Korea, is answering reporters' questions at the "2023 First Half Price Stability Target Operation Status Review Briefing" held on the 19th at the Bank of Korea Podium in Jung-gu, Seoul. Photo by Joint Press Corps

"If the change led by the Governor is to continue, shouldn't you stay at the Bank of Korea?" (Bank of Korea Town Hall Meeting)

Recently, the Bank of Korea has been unexpectedly stirred by rumors of Governor Lee Chang-yong becoming Deputy Prime Minister. Governor Lee took office in April last year and still has nearly three years left in his term until April 2026. However, with Deputy Prime Minister for Economic Affairs Choo Kyung-ho, who plans to run in next April's general election, expected to vacate his position soon, speculation about Governor Lee becoming the next Deputy Prime Minister has surged. As these rumors have been widely circulated both inside and outside the Bank, Governor Lee has been trying to quell them, but inside the Bank, there is hopeful attention on the Yoon Seok-yeol administration’s next personnel moves. At a recent internal event, the 'Town Hall Meeting,' an employee directly asked Governor Lee about the Deputy Prime Minister rumors.

The reason Governor Lee has been mentioned in such speculation is that, at a critical time when the world is fighting inflation, he has relatively smoothly led monetary policy as the head of the central bank and has strengthened cooperation with government policies when major domestic issues arise, thereby enhancing his presence. His international experience and personal network, built through his time at the Asian Development Bank (ADB) and the International Monetary Fund (IMF), are also evaluated as shining during crisis responses.

In particular, this speculation is further fueled by the fact that Governor Lee’s interests are not limited to monetary policy. At a press conference following last month’s Monetary Policy Committee meeting, he repeatedly emphasized the need for structural reforms in pensions and labor, stating, "Old-age poverty will become a social problem within the next 5 to 10 years." He did not hesitate to criticize attempts to revive the economy solely through fiscal and monetary policies while postponing structural reforms, calling it "a shortcut to national ruin." At the inflation briefing on the 19th, he responded to Deputy Prime Minister Choo’s remark, "I hope ramen prices come down appropriately," by saying, "I interpret that as a political statement," warning of the risks of excessive government intervention in price management, continuing his candid remarks. Governor Lee is also accelerating internal innovation. The Bank of Korea, which had earned the nickname 'Bank Temple' due to its excessive quietness, has been strengthening communication both internally and externally since Governor Lee took office.

A Bank of Korea official said, "U.S. Treasury Secretary Janet Yellen also served as Chair of the Federal Reserve, the U.S. central bank, so considering Governor Lee’s international organization experience and career, it’s not an impossible scenario," adding, "While the Governor’s move to Deputy Prime Minister would certainly help enhance the Bank of Korea’s status, from the staff’s perspective, there is some regret that the changes initiated by Lee Chang-yong, which have just gained momentum, might regress." In the financial industry, considering Governor Lee’s capabilities, there is also an assessment that aiming for the next Deputy Prime Minister position is possible given his remaining term as Governor.

According to the Presidential Office and the Ministry of Economy and Finance on the 23rd, President Yoon will return on the 24th after his visits to France and Vietnam, and next week, vice ministerial personnel changes are expected to be made. The financial industry anticipates that the Yoon administration, entering its second year in power, will start renewing the atmosphere and accelerate state affairs management beginning with the replacement of vice ministers. In particular, as personnel verification has recently begun for many officials, there are forecasts that replacements are imminent.

Regarding Deputy Prime Minister Choo, the prevailing view is that his resignation will likely occur around the end of the year, when next year’s budget bill passes the National Assembly. Choo is a two-term member of the National Assembly representing Dalseong County in Daegu and plans to challenge for a third term in next year’s general election. However, speculation about Choo becoming Prime Minister is also rising, leaving some uncertainty. Currently, Chief Presidential Secretary for Economic Affairs Choi Sang-mok is the leading candidate for the next Deputy Prime Minister, and Financial Services Commission Vice Chairman Kim So-young is also being considered for that position. Recently, Kim So-young’s move to place 20.9 billion won worth of family company stocks in a blind trust has added weight to these speculations. Kim Byung-hwan, an economic and financial secretary at the Presidential Office and a former Ministry of Economy and Finance director, is reportedly being strongly considered for the Financial Services Commission Vice Chairman position.