BOK Governor: "Interest Rates Can't Control Real Estate"

"'Stablecoin G2' Is Simply Fear Marketing"

Lee Changyong, Governor of the Bank of Korea, stated that interest rates alone cannot control real estate prices.

Lee Changyong, Governor of the Bank of Korea. Photo by Yonhap News

According to attendees, Governor Lee made these comments during a special lecture titled "Monetary Policy and Structural Reform," hosted by the Department of Economics at Seoul National University on September 16. He was referring to the Bank of Korea's decision to keep the base interest rate unchanged at 2.50% in both July and August.

He reportedly explained, "Delaying a 0.25 percentage point rate cut by a month or two does not have a significant impact on the economy, but if a rate cut signal causes real estate prices in Seoul to rise, it will create more difficulties." He added that the decision was based on the philosophy of "not fueling the real estate market through liquidity supply."

Regarding the introduction of a won-denominated stablecoin, he pointed out, "The benefits are not clearly visible, but it could destabilize the currency system, so we need to be cautious."

He further stated, "Issuing a won-denominated stablecoin will not necessarily prevent the penetration of dollar-denominated stablecoins." He added, "The claim that if we issue it first, we could become part of a 'Stablecoin G2 (the two major countries)' is simply fear marketing."

Governor Lee also emphasized the need for structural reform in the Korean economy. Referring to the revised economic outlook released last month, in which this year's growth forecast was set at 0.9%, he diagnosed, "It is not so much a crisis situation as it is a decline in the potential growth rate."

He continued, "Fiscal and monetary policies are not inherently bad, but they alone cannot achieve structural reform." He explained, "Fiscal policy is essentially using future tax revenues in advance, and while lowering interest rates can help adjust the economy during downturns, it cannot fundamentally change the overall structure."

On the issue of the rising national debt ratio, he said, "Given the current economic downturn, fiscal policy must play a certain role," but also stated, "It is not good for national debt to continue increasing."