It has emerged that more than half of the assets reported by Bank of Korea governor nominee Shin Hyun-song were foreign-currency assets. Given that...
Bank of Korea governor nominee Shin Hyun-song answers questions from reporters as he heads to a confirmation hearing preparation office set up at Hanwha Finance Plaza in Jung-gu, Seoul, on the 31st of last month.
Han Soo-bin, reporter It has emerged that more than half of the assets reported by Bank of Korea governor nominee Shin Hyun-song were foreign-currency assets. Given that he has lived overseas for roughly forty years, this may be understandable, but some warn that, as the BOK governor, one arm of the foreign exchange authorities, it could spark a ‘conflict of interest’ debate. It is expected to be a point of contention at the National Assembly confirmation hearing likely to be held around mid month. According to the request for a confirmation hearing submitted to the National Assembly on the 5th, the total assets held by the nominee, his spouse, and their eldest son amount to 8,241,020,000 won, of which 55.5% were overseas financial assets and real estate. In particular, the nominee held deposits totaling 2,036,540,000 won at U.S. securities firms and asset managers, a Swiss investment bank, and a Spanish bank. The deposits were in foreign currencies, including U.S. dollars, British pounds, euros, and Swiss francs. He also invested the equivalent of 150,000 pounds in U.K. government bonds. Most of the deposits of his spouse, totaling 1,840,150,000 won, were also foreign-currency deposits at overseas financial institutions, and his eldest son, a British national, reported holding 82,390,000 won in foreign-currency deposits and 28,610,000 won in overseas stocks. The won value of foreign-currency assets changes with movements in exchange rates, and in highly volatile periods the scale of increases and decreases widens. The nominee's assets measured in won have also increased as exchange rates have surged amid the recent deterioration in the Middle East situation. The nominee's foreign-currency assets were converted into won using the base exchange rate as of the 20th of last month. The won-dollar exchange rate rose from 1,499.7 won on the 20th of last month to 1,530.5 won on the 1st of this month, a gain of more than 2%, before falling to 1,518.8 won on the 3rd. The won-converted valuation of the nominee's foreign-currency assets is estimated to have at one point increased by close to 100,000,000 won. If he takes office as BOK governor, dealing with the currently high exchange rate is a major issue, and some say that, because his assets measured in won rise as the exchange rate increases, this could invite unnecessary misunderstanding. Choi Sang-mok, a former Minister at the Ministry of Economy and Finance , also faced criticism last March when asset disclosures revealed an investment of about 200,000,000 won in U.S. Treasury securities, with critics saying the foreign exchange authority chief had bet on a ‘strong dollar’. Seo Ji-yong, a professor in the Department of Business Administration at Sangmyung University, said, “Holding foreign-currency assets is not wrong, but if monetary policy or financial stability measures that are favorable to his own asset portfolio were to result, it could invite misunderstanding,” and added, “There should be a plan of his own to resolve issues that could cause moral hazard, such as disposing of a significant portion of the foreign-currency assets.” A BOK official said in response that “given that he has worked abroad for his entire career, the process by which the assets were accumulated should be considered,” and that “once he serves domestically as governor, there is no reason for overseas assets to increase further, and the share of existing overseas assets is expected to decline.”
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