By Economics Correspondent Jeong Yu-na
SUYANG: The Times-Courier has received reports from the Bank of Haesan that Chairman Yoo Geon-u has been fired on the orders of President Kim I-seul this morning. This was an unexpected move that likely stems from the central monetary authority’s current reluctance to make guarantees about bailing out Haesanite banks in case of default. If these reports are confirmed, it would be an unprecedented reduction of the Bank’s independence, in a move likely to worry democracy watchers and international economists across the IDU.
Chairman Yoo, who was appointed in 2019 by the Choi administration, has long been reluctant to use monetary policy for any purpose other than fighting inflation. While modern academic research has now shown that this method can lead to significant inefficiencies and potential economic hardship, Yoo hails from the long tradition of ordoliberalism in Haesanite economics and believes that government interference in the economy can only lead to long run disaster. In stark contrast to the aged, battle tested Yoo, the expected replacement is 41 year old Namseon University professor Alina Choi, who has explicitly called for the Bank of Haesan to provide a backstop to banks in case of bankruptcy or default.
It is unclear how markets, which opened down 3.2% this morning, will respond to this news; however, many economists and scholars are saying that the loss of central bank independence is worth it to prevent a potential banking disaster. Banks have remained sufficiently capitalized, and there are few signs of a bank run forming, although many large banks are now enforcing strict withdrawal limits. This bold move by President Kim will surely assuage any remaining worries creditors might have about Haesan’s unfolding economic situation.
