“Overlapping High Inflation and Geopolitical Risks… Central Bank Communication Is a Key Variable for Economic Stability” [ESF2026]
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Day 2 of the 17th Edaily Strategy Forum
Discussion on Policy Credibility and Communication Direction
A lively ‘Clash of Positions’ in Monetary and Financial Policy
Proposing Solutions for Central Bank Communication Strategies
[Edaily By Reporter Da-won Lee, Yeon-seo Kim and Ju-hwan Kim] Viewpoints have been raised to redefine the role of monetary and financial policy in maintaining economic stability and supporting sustainable growth, as the global economic order is changing rapidly. This was driven by the fact that central bank credibility and communication strategy have emerged as key variables for economic stability.
(From left) Yoon-jae Cho, Former Member of the Monetary Policy Board, Bank of Kore; Soo-Min Park, Rep. of People Power Party of Korea; Dong-hyun Ahn Professor of Economics in Seoul National University; Cynyoung Park, Director of The South East Asian Central Banks(SEACEN); Andrew T. Levin, Professor of Economics in Dartmouth College; and Jin-il Kim Member of the Monetary Policy Board, Bank of Korea, are participating in a discussion on the topic “Monetary and Financial Strategies for Sustainable Growth in an Age of Disorder” at the 17th Edaily Strategy Forum held on June 17 at the Shilla Hotel in Jangchung-dong, Jung-gu, Seoul on the 17th. (Photo = Young-hoon Lee, Edaily Reporter)
With Yoon-jae Cho, Former Member of the Monetary Policy Board of Bank of Korea, serving as the moderator, experts from political circles, academia, and international organizations participated in the discussion to share their insights regarding methods for enhancing monetary policy credibility and stabilizing financial markets.
Rep. Soo-Min Park of People Power Party of Korea expressed support for strengthening monetary policy communication while emphasizing the importance of maintaining a clear division of responsibilities between the central bank and the government. ”The era for central bank announcing interest-rate decisions without explanation is over,“ he said. ”In the face of complex crises such as geopolitical risks from the Middle East, markets should be given access to the collective reasoning behind monetary policy decisions.“
Dong-hyun Ahn, Professor of Economics at Seoul National University, did not hold back sharp criticisms regarding the Bank of Korea‘s expansion of so-called ’forward guidance.‘ He pointed out, ”Highly explicit guidance may result in the central bank constraining itself, which could lead to a a market backlash when the central bank fails to keep those commitments,“ adding, ”Providing too much information may weaken incentives for private market participants to conduct their own analysis, potentially distorting market expectations,“ He further noted, ”Given Korea’s strong sensitivity to U.S. monetary policy and foreign exchange fluctuations, central bank communication should remain firmly grounded in conditional forecasts rather than definitive commitments,“ he said.
Cynyoung Park, Director of The South East Asian Central Banks(SEACEN), approached the discussion from the perspective of global cooperation and external risk management. ”The chronic Achilles‘ heel of Asian finance is its high vulnerability to dollar liquidity,“ she said, advising that ”We needs to move beyond relying on the convenience of the U.S. dollar.“ She subsequently appended, ”Central banks should work together to integrate financial systems and strengthen multilateral financial safety nets.“
