Who Can End Korea's Central Bank Crisis?
South Korea is having a Greenspan dilemma at the very worst possible moment.
OK, so 2005-2006 seems like a really, really long time ago given how event-rich the global financial system has been since then. But that was a time of near-unprecedented nail-biting among investors as Federal Reserve Chairman Alan Greenspan's tenure drew to close. While the how-do-we-replace-the-maestro question had come up 18 years earlier when Paul Volcker left the Fed building, the prospect of a Greenspan-less world left many on the verge of panic.
That's where Seoul finds itself today, as Kim Choong Soo prepares to leave the Bank of Korea on March 31. South Korea must now replace a man who during his four-year tenure confounded hedge fund managers who were betting the economy would go the way of Iceland's and crash. Now, Kim almost seems to be putting on his own hedge-fund manager's hat -- he's leaving at the very top tick of a distinguished stint.
Others have tried to do the same, rarely with good results. Think of Ian Macfarlane. In September 2006, he left the Reserve Bank of Australia at the ideal time and his reputation has stood the test of time. Greenspan, not so much. His guru card was revoked after what Asians call the "Lehman shock" and a reappraisal of his easy-money, easy-regulation ways.
Kim, I'll hazard a guess, will be remembered in Macfarlane-like terms and he'll be a regular face on the international speaking circuit. Among his greatest successes has been to give Korea a voice in the room when top monetary powers chime in. Whether at International Monetary Fund meetings, Davos or Fed confabs in Jackson Hole, Wyoming, Kim's input is sought in ways unique for an East Asian policy maker.
That leads me to bold suggestion: Don't go, Dr. Kim! Sure, it would be unprecedented for a BOK official to serve two terms and, at 66, he's clearly itching for some downtime and a more lucrative gig. But eyeing the coming storm in Seoul, where no obvious favorites have emerged and President Park Geun Hye's scandal-prone government will have a hard time getting virtually anyone confirmed without a fight, why not renominate Kim? Or at the very least, extend his term by a year?
Again, this is a nonstarter if Kim isn't willing. And one person does not make an entire economy. But let's face it, Park's policies have impressed few and Kim has proved to be an adult in the economic room at the best possible time. It'd be a shame for Korea to let him walk at what would be the worst possible moment.
(William Pesek is a Bloomberg View columnist. Follow him on Twitter at @williampesek.)
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