National audit of the Bank of Korea by the National Assembly's Finance and Economy Planning Committee
Bank of Korea Governor Shin Hyun-song said Monday that some level of government bond issuance "is desirable" when considering the development of capital markets.
Speaking that afternoon at a national audit by the National Assembly's Finance and Economy Planning Committee, Shin responded to a question from Democratic Party of Korea lawmaker Oh Ki-hyung about the appropriate scale of government bond issuance. "There are of course fiscal considerations, but I think some level of scale is desirable when you factor in capital market development," Shin said. "A certain volume needs to be issued to maintain and manage the size of the bond and government bond markets, and some amount is necessary for the sake of capital markets as well."
On the argument that more government bonds should be redeemed, Shin said market price movements over the past two weeks clearly showed an effect. "Since the announcement that the scale of government bond issuance would be reduced, bond yields have stabilized considerably and have continued to hold at levels significantly lower than those of major countries," he said.
When Oh pressed further, asking whether Shin's position was that the current situation could be maintained, the governor said the appropriate size of any additional issuance should be determined case by case based on market conditions. "Since the announcement of the issuance reduction, the market has stabilized considerably, and South Korea's government bond market is quite stable compared to those of major countries," he said.
kimstar@heraldcorp.com
