[2023 National Audit] "Climate Crisis Greatly Affects Prices"... Lee Chang-yong "Will Increase Research"

[Image source=Yonhap News]

Lee Chang-yong, Governor of the Bank of Korea, stated that since climate change is significantly impacting the domestic inflation rate, related research should be further strengthened in the future. He added, "I will gradually increase the resources that I can allocate within my capacity."

At the National Assembly's Planning and Finance Committee audit held on the 23rd at the Bank of Korea headquarters in Jung-gu, Seoul, Governor Lee responded to Justice Party lawmaker Jang Hye-young's remark that "it is now time for the Bank of Korea to consider the climate crisis as an important variable, along with traditional factors such as international oil prices and exchange rates, when forecasting inflation."

Lawmaker Jang explained, "In May, the European Central Bank released a report on the impact of climate change on inflation," adding, "The report provided a clear and specific analysis showing that last year's European heatwave caused by the climate crisis raised Europe's food price inflation rate by 0.67 percentage points."

She continued, "If temperature rises continue as they are now, the global inflation rate is expected to increase by 1 percentage point annually, and food price inflation could rise by up to 3 percentage points each year," emphasizing, "This announcement means that we are living in an era where 'climateflation' has become a reality."

Lawmaker Jang stated, "(Climate change) is not simply one of many medium- to long-term macroeconomic variables, but a factor that directly affects the Bank of Korea's raison d'?tre, such as price stability and financial stability, requiring an approach that is on a completely different level from before."

She also pointed out that the Bank of Korea lacks analysis on 'physical risks' such as sea-level rise and poor harvests among climate risks, and since the private sector is already ahead in analyzing the impact of the climate crisis on monetary policy, the Bank of Korea also needs to actively conduct research.

Governor Lee said, "It is time to conduct much more research on climate change," but explained, "It is difficult to find experts domestically, and we have not been able to invest much, so we are gradually increasing our efforts."

He added, "Realistically, there are many disagreements about how to organize (climate change-related) teams and how far responsibilities should extend," but said, "However, climate change is progressing rapidly, and it is an important issue for our country's competitiveness, so I will gradually increase the resources that I can allocate within my capacity."