BOK Nominee Shin Says Price, Financial Stability Are Foundation for Growth

BOK Governor Nominee Faces Confirmation Hearing

"For Now, Inflation Takes Priority Over Growth"

High Dollar-Won Rate Reflects Derivatives Tail Wagging the Dog

Shin Hyun-song, nominee for Bank of Korea governor, said on April 15 that he would put greater weight on inflation if price stability and growth come into conflict under current conditions. He also pushed back against the market label of “pragmatic hawk,” saying it is not desirable to divide policymakers into a simple hawk-dove binary.

At a confirmation hearing before the National Assembly’s Planning and Finance Committee on April 15, Shin was asked which goal should take priority if the war in the Middle East drags down growth while pushing up prices. He replied that inflation would take precedence, particularly in an economy like South Korea’s that is highly sensitive to oil prices. When asked whether that meant he viewed growth as less important than inflation, Shin said stable growth is built on price stability and financial stability.

He added that monetary policy should be used if Middle East risks persist, spill over into core inflation or inflation expectations, and trigger second-round effects. In written responses submitted to parliament ahead of the hearing, Shin said the recent rise in prices stemmed from a temporary supply shock and that responding with monetary policy would not be appropriate. Still, if the war is prolonged and its impact on prices and the economy widens sharply, authorities should respond with a mix of tools including monetary and fiscal policy.

Shin also endorsed the BOK board’s decision on April 10 to leave the benchmark interest rate unchanged for a seventh straight meeting, calling it well suited to current conditions. Leaving rates unchanged should not be viewed as passive, he said. Rather, it reflected a choice of strategic patience between inflation pressures and slowing growth.

On the dollar-won exchange rate, Shin said the currency pair has remained at a considerably elevated level in recent months. He said heavy trading through off-balance-sheet derivatives appears to have created a tail-wagging-the-dog effect. A similar pattern appeared in April 2025, when the US imposed reciprocal tariffs, and two years ago during the unwind of the yen carry trade, he said. In both episodes, trading through off-balance-sheet derivatives exceeded recorded capital outflows, and offshore non-deliverable forward trading appears to have played a substantial role this time as well.

Shin also softened his earlier stance on stablecoins. He said he had been negative on stablecoins in the past, but has now concluded that, as someone set to lead a central bank, they can be used in both complementary and competitive ways alongside deposit tokens.

Addressing conflict-of-interest concerns over his foreign-currency asset holdings, Shin said he has already disposed of more than half and will sell 100% within a short period.

Shim Seong-mi, Korea Economic Daily reporter smshim@hankyung.com