Cover IMF Staff Country Reports
Republic of Korea: Selected Issues
Author:
International Monetary Fund. Asia and Pacific Dept
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Series:
IMF Staff Country Reports
Volume/Issue:
Volume 2019: Issue 133
Language:
English
Publication Date:
13 May 2019
DOI:
https://doi.org/10.5089/9781498314824.002
ISBN:
9781498314824
ISSN:
1934-7685
Pages:
76
Keywords:
ISCR; CR; opt-out agreement; financial condition; tail risk financial condition outcome; labor market slack; EU limit; opt-out option; Labor markets; Macroprudential policy; Output gap; Employment; Manufacturing; Global
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This Selected Issues paper analyzes monetary policy and financial cycles; the evolution of macroprudential policies in Korea; the efficacy in prudential policies in taming financial excess and building financial resilience and; the interaction between monetary policy and macroprudential policies. Evidence for Korea suggests that financial stability will not necessarily materialize as a natural by-product of a so-called appropriate monetary policy stance. Although the effects of monetary and macroprudential instruments may overlap, they are not perfect substitutes. Macroprudential policies can also impact the banking system by affecting bank funding costs through the net interest margin. In certain circumstances borrower-based prudential measures and monetary policy can complement one another. Macroprudential policies can impact banks profitability. Policymakers should be mindful that macroprudential policy is not free of costs and that there may be trade-offs between the stability and the efficiency of financial systems.
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Cover IMF Staff Country Reports
IMF Staff Country Reports
ISSN:
1934-7685
Publisher:
International Monetary Fund
Volume 2019: Issue 133