2022 Annual Report

2023.
3
ISSN 0067-3706
2022
2022 Annual Report

Annual Report
2023. 3
2022
Annual Report
2023. 3
「 Bank of Korea Act 」
Article 102 (Publication of the Annual Report)
① The Bank of Korea shall, within three months after the end of each
fiscal year, submit to the government its annual report and publish it.
This annual report shall outline its business status, its monetary policy
and the government’s foreign exchange policy, and analyze the eco-
nomic and financial situation of the country during the fiscal year.
② The annual report in Paragraph(1) shall be approved by a resolution of

the Monetary Policy Board.
Preface by the Governor
As the central bank responsible for implementing Korea’s monetary

and credit policies, the Bank of Korea has dedicated its utmost efforts to
achieving price and financial stability, thereby contributing to the sound
development of the national economy.
In 2022, the Korean economy encountered significant challenges due

to worsening external conditions. Amidst weakened global economic
growth due to the Russia-Ukraine war and contractionary monetary
policies in major countries in response to escalating global inflation, the
Korean economy experienced a slowdown in growth. Consumer price
inflation persisted on an upward trajectory, exceeding the target level,
mainly due to the substantial increase in international prices of raw
materials and escalating inflationary pressure on the demand side. The
financial and foreign exchange markets witnessed credit risk aversion
heightening, particularly in the short-term financial market in the after-
math of strains in the project-financing asset-backed commercial paper
(PF-ABCP) market, as volatility rose due to uncertainties at home and
abroad.
Against this backdrop, the Bank of Korea implemented its monetary

policies with the priority of maintaining price and financial stability in
consideration of providing support for vulnerable sectors of the econo-
my. First, in response to the persistently high inflation, the Bank raised
the Base Rate from 1.00 percent to 3.25 percent across seven occasions
in 2022. This decision was made to curb the risk of entrenched high
inflation and subsequently greater damage to the economy in the long-
term. The Bank also devised various market stabilization measures to
proactively respond to instability in the financial and foreign exchange
markets. Thanks to these concerted efforts, the upward trend of infla-
tion slowed slightly toward the end of the year, and the financial market
demonstrated a relatively swift recovery.
The Bank of Korea further enhanced its research capabilities in order

to provide precise assessments of economic conditions and devise elab-
orate policy responses. Major domestic and global issues were analyzed
in depth, including the impact of high inflation and high interest rates,
as well as the reorganization of the global supply chain. Multilateral
research was also carried out on medium- to long-term changes in re-
gional economies and the broader economic environment. In order to
contribute to the foundation of sustainable growth in the Korean econ-
omy, the Bank conducted research on the risk posed by climate change,
while diligently continuing its research efforts on a central bank digital
currency (CBDC) to proactively address the accelerating digital trans-
formation of the economy.
In addition, the Bank bolstered its external communication efforts

to fulfill its mandate as a national economic think tank and foster en-
hanced public understanding and trust. The Bank proactively shared
its research findings and materials with external stakeholders through
various communication channels by expanding the publication of re-
search reports and establishing and operating a blog. Seeking to make
practical contributions to balanced regional development, the Bank ac-
tively engaged in communication activities with local governments and
communities, while significantly expanding its social media content to
introduce its policies and businesses to the public in a more accessible
and engaging manner. With regard to the organization’s internal man-
agement, the Bank developed and gradually implemented a compre-
hensive management and personnel restructuring plan with an aim to
evolve into a more open and horizontally structured organization, while
continuing its efforts to fulfill its social responsibility.
This Annual Report provides an analysis of the financial and eco-
nomic conditions in Korea and is a systematic presentation of the op-
eration and management conditions of the Bank of Korea during the
year 2022. In preparing this report, we have endeavored to enhance its
usability and accessibility by organizing and presenting the information
about this year in a clear and structured format, and by strengthening
the report’s linkage with other relevant materials. It is our hope that this
report will help to broaden the public’s understanding of the Bank of
Korea’s roles and the situation facing the Korean economy.
March 2023
Rhee, Chang Yong
Governor
Bank of Korea
* The smaller numbers below each figure refer to the respective figure for 2020, 2021, and 2022.
Monetary Policy Board
Chairman Rhee, Chang Yong

Member Cho, Yoon-Je
Member Suh, Young Kyung
Member Joo, Sangyong
Member Lee, Seungheon
Member Park, Ki Young
Member Shin, Sung Hwan
I. Economic Trends 1
Contents
1. Real Economy 3
2. Financial and Foreign Exchange Markets 17
II. Bank of Korea’s Conduct of Business 27
1. Development and Implementation of Strategies 31
2. Monetary Policy 32
3. Financial Stability 40
4. Currency Issuance 52
5. Payment and Settlement Business 59
6. Foreign Exchange and International Cooperation 66
7. Research and Statistics 78
8. Treasury and Securities Business 90
9. External Communications 96
III. Management Status 105
1. Organization Management 107
2. Financial Status 119
Appendix 137
1. Overview of Bank of Korea 139
2. Minutes of the Monetary Policy Board Meeting 149
3. Contributing Departments & Authors by Section 150
List of Boxes
Box II-1. Findings of the 2021 Survey on Cash Usage Practices
by Economic Agents 57
Box II-2. Overhaul of the Bank of Korea’s Economic Statistics

System(ECOS) 88
Box II-3. Launch and Operation of the Bank of Korea Blog 102
Box III-1. Bank of Korea’s Management and Personnel

Restructuring Plan 117
Box III-2. Characteristics of the Bank of Korea’s Financial

Statements 122
Tab. I- 1. Growth Rate of Manufacturing by Sector 8
List of
Tab. I- 2. Growth Rate of Services by Sector 9
Tables
Tab. I- 3. Employment Related Indicators 11
Tab. I- 4. Growth in Wage Indicators 12
Tab. I- 5. Rate of Increase in Housing Prices and Housing

Leasehold Deposits 13
Tab. I- 6. Exports by Major Item 14
Tab. I- 7. Imports by Major Item 15
Tab. I- 8. Major Indicators by Region 16

Tab. I- 9. Major International Interest Rates and Risk Premiums 17
Tab. I-10. Deposits at Financial Institutions 23
Tab. I-11. Loans by Financial Institutions 24
Tab. II- 1. Summary of Medium-Term Strategies in 2022 31
Tab. II- 2. Scale of Liquidity Adjustment via Open Market

Operations 34
Tab. II- 3. Loans of Bank of Korea 35
Tab. II- 4. Deposits with Bank of Korea 36
Tab. II- 5. Adjustment of Bank Intermediated Lending Support

Facility Ceiling 37
Tab. II- 6. Bank of Korea’s On-site Joint Examination 44
Tab. II- 7. Financial Market Stabilization Measures in 2022 48
Tab. II- 8. Current Status of Korea's Currency Swap Agreements 50
Tab. II- 9. Banknotes and Coins Issued, Withdrawn, and

Outstanding by Denomination 52
Tab. II-10. Production of Banknotes and Coins 53

Tab. II-11. Supply of Intraday Liquidity 60
Tab. II-12. Timeline for Raising Collateral-to-Net Debit Cap Ratio for
Guaranteeing Net Settlements 61
Tab. II-13. Net Transactions by Foreign Exchange Authorities 66
Tab. II-14. Composition of Foreign Exchange Reserves 67
Tab. II-15. Percentage Shares in Foreign Assets 69
Tab. II-16. Use of Domestic Financial Institutions in Reserves

Management 71
Tab. II-17. Investment in ESG-Related Assets 71
Tab. II-18. Main Themes of International Forums 73

Tab. II-19. Main Themes of Asia-Pacific Regional Forums 74
Tab. II-20. BOK-Knowledge Partnership Program (KPP) 75
Tab. II-21. Central Banking Study Program (CBSP) 76
Tab. II-22. Subscriptions & Contributions to International Financial

Institutions 76
Tab. II-23. Loans to IMF 77
Tab. II-24. Receipts & Disbursements of Treasury Funds 90
Tab. II-25. Status of Treasury Agencies & Receipts Value 91
Tab. II-26. Treasury Network Transactions 92

Tab. II-27. Ceilings on Loans to Government 92
Tab. II-28. Issuance & Redemption of Korea Treasury Bonds 93
Tab. II-29. BOK’s Government Fund Management Business 94
Tab. II-30. Fund Management and Operation 95
Tab. II-31. Visitors to BOK’s Main Website 97
Tab. II-32. Social Media Operated by BOK 98
Tab. II-33. Visitors to BOK Money Museum 98
Tab. II-34. Number of Complaints Processed 98
Tab. II-35. On-Site Economic Education Performance 99
Tab. III- 1. Number of New Hires per Year 112
Tab. III- 2. Number of Female Managers 112
Tab. III- 3. Objectives and Tasks of the 10th Digitalization and

Digital Strategic Plan 115
Tab. III- 4. Income and Expenses 121
Tab. III- 5. Balance Sheets 124
Tab. III- 6. Income Statement 126

Tab. III- 7. Statements of Changes in Equity 128
Tab. III- 8. Statements of Appropriation of Earned Surplus 128
Tab. Appendix- 1. Number of Monetary Policy Board Meetings 142

Fig. I- 1. Changes in Global Economic Growth 3
List of
Fig. I- 2. Growth Rate of Global Economy and Major Countries 3
Figures
Fig. I- 3. Changes in Global Trade Growth 4
Fig. I- 4. International Oil Prices 5
Fig. I- 5. CPI Inflation in Major Countries 5
Fig. I- 6. GDP Growth and Contributions by Expenditure Item 6
Fig. I- 7. Changes in Consumption 7
Fig. I- 8. Changes in Fixed Investment 7

Fig. I- 9. Changes in Exports 7
Fig. I-10. GDP Growth and Contributions by Economic Activity 8
Fig. I-11. Changes in Employment Figures by Industry 9
Fig. I-12. Changes in Employment Figures by Employment Status 10
Fig. I-13. Changes in Employment Figures by Age 10
Fig. I-14. Wage Growth by Employment Status 11
Fig. I-15. Major Inflation Indexes 12
Fig. I-16. CPI Inflation and Contribution by Item 13
Fig. I-17. Current Account 14
Fig. I-18. Services Account 15
Fig. I-19. Major International Interest Rates and EMBI+ Spread 17
Fig. I-20. Stock Indexes of Major Advanced Economies & MSCI

Emerging Markets Index 18
Fig. I-21. USD per EURO and JPY per USD Exchange Rates 19
Fig. I-22. Major Market Interest Rates 21

Fig. I-23. KOSPI and KOSDAQ Indexes 22
Fig. I-24. Exchange Rate, Nominal Effective Exchange Rate Index

for Korea 25
Fig. I-25. USD/KRW Exchange Rate Volatility 25
Fig. I-26. Foreign Exchange Swap Rate 26

Fig. II- 1. Inflation Target and CPI Inflation 32
Fig. II- 2. Bank of Korea Base Rate 34
Fig. II- 3. Scale of Liquidity Adjustment via Open Market

Operations 35
Fig. II- 4. Bank Intermediated Lending Support Facility Ceiling and

Interest Rates 37
Fig. II- 5. Financial Stress Index(FSI) and Financial Vulnerability

Index(FVI) 41
Fig. II- 6. Household Credit 42
Fig. II- 7. Corporate Credit and Financial Soundness 42

Fig. II- 8. Commercial Bank Asset Quality and Profitability 43
Fig. II- 9. Financial Institutions Capital Adequacy Ratios 43
Fig. II-10. External Debt-to-Nominal GDP Ratio and Short-Term

External Debt-to-Official Foreign Reserves Ratio 43
Fig. II-11. Commemorative Coins Issued in 2022 53
Fig. II-12. Counterfeit Banknotes Detected 54
Fig. II-13. Winners of the UCC Currency Protection

Campaign Contest 54
Fig. II-14. Poster Promoting the Guarantee of the Right to

Use Cash 55
Fig. II-15. Korean Banknote Denomination Identifier App 56
Fig. II-16. Share of Expenditure by Payment Method 57
Fig. II-17. Corporate Cash Holdings by Purpose 58
Fig. II-18. Share of Household Cash Holdings by Currency Type 58
Fig. II-19. BOK-Wire+ Funds Transfer Value 59

Fig. II-20. Scope of CBDC Simulation Study 62
Fig. II-21. Provision of Private Map Platform Information after

Interlinking with FIN Map Service DB 64
Fig. II-22. Meeting with U.S. Treasury Secretary Janet L. Yellen 74
Fig. II-23. Bank of Korea International Conference 2022 81
Fig. II-24. Korean Statistical Society - BOK Joint Forum 87
Fig. II-25. User Portal’s Main and Statistics Search Screens 88
Fig. II-26. Loans to Government 92
Fig. II-27. Issuance & Redemption of Korea Treasury Bills 93
Fig. II-28. Investment through BOK Securities Custody Services 93
Fig. II-29. Final Round of the Monetary Policy Challenge 97

Fig. II-30. Bank of Korea's Social Contribution Activities 99
Fig. II-31. BOK Friday Lecture: Special Lecture by Monetary Policy

Board Members 100
Fig. II-32. Lecture by Governor Rhee Chang Yong at the

“Economics and Finance Course for High-Ranking
Officials in the National Assembly” 100
Fig. II-33. YouTube Video Titled “Economics Lecture with Quizzes” 101
Fig. II-34. “BOK Commentary” on BOK YouTube Channel 102
Fig. II-35. Monthly Visitors to the Main BOK Website in 2021/2022 103
Fig. III- 1. Town Hall Meeting 108
Fig. III- 2. Operational Risk Management Structure of

Bank of Korea 109
Fig. III- 3. Flow Chart of BOK’s Operational Risk Management 109
Fig. III- 4. Construction Site of Bank of Korea’s Integrated Annex 116
Fig. III- 5. Objectives of Restructuring the Management and

Personnel System 118
Fig. III- 6. Assets 119
Fig. III- 7. Liabilities and Capital 120
Fig. Appendix-1. First Monetary Policy Board Meeting 139
Fig. Appendix-2. Monetary Policy Board Meeting 140
Fig. Appendix-3. Members of the Monetary Policy Board 142
Fig. Appendix-4. Executive Officers and Auditor 144
Fig. Appendix-5. Organization 146

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Ⅰ
Economic Trends
1. Real Economy 3
2. Financial and Foreign Exchange Markets 17

1. Real Economy1) 3
Ⅰ. Economic Trends
A. Global Economy
In 2022, the growth of the global econo-

Figure Ⅰ- 1. Changes in Global Economic Growth
my heavily decelerated in accordance with
1. Real Economy
simultaneous sluggishness in the economies (%) (%)
8 8
of major countries. By country, in the U.S.
and the euro area, the economic slowdown 6 6
was mainly attributed to price inflation and 4 4
the subsequent interest rate hikes. In Japan 2 2
and China, COVID-19 quarantine measures 0 0
were a leading factor behind their economic -2 -2
downturn. The recovery of global trade was -4 -4
also weakened, affected by the global eco- -6 -6
nomic slowdown. Meanwhile, amid growing -8 -8

2013 2016 2019 2022e
volatility due to the Russia-Ukraine war, the
Sources: IMF
global economic slowdown, and the OPEC+
decision to cut oil production, international
oil prices fluctuated at a generally higher level
compared to 2021. Prices grew at a consider-
Figure Ⅰ- 2. G
rowth Rate of Global Economy and
ably faster rate, affected by a surge in global Major Countries
commodity prices.
2020 2021 2022
(%) (%)
Slowdown in Global Economic Growth 10 10
6 6
In 2022, the growth of the global economy
stagnated significantly in line with the simul-
2 2
taneous economic downturn of major coun-
tries, which led to the estimation that it would -2 -2
remain in the lower to mid-3 percent range. 2)
-6 -6
This was largely driven by the prolonged Rus-
sia-Ukraine war, China’s lockdown, tightened
-10 -10
monetary policy stances of major economies, World U.S. Euro Area Japan China India ASEAN-5
and energy supply disruptions. Sources: IMF, statistics agencies of individual countries
1) A detailed explanation of economic trends during 2022 can be found in “I. Monetary Policy Operating Conditions” of
the Monetary Policy Report (Quarterly) published by the Bank of Korea, such as the March 2022 Issue, June 2022
Issue, September 2022 Issue, December 2022 Issue, and March 2023 Issue.
2) The growth rate of the global economy in 2022 estimated by major international organizations: 3.4 percent by the
IMF, 3.2 percent by the OECD·U.N., and 3.1 percent by the World Bank.
By countr y, the U.S. saw its economic
4
growth slow due to rising inflationary pres-
sures and the subsequent rapid policy rate
rises. In the euro area, amid the prolonged
Russia-Ukraine war, the economy continued
to show a downward trend owing to high
inflation. In the case of Japan, the economic
recovery was sluggish, affected by prolonged
quarantine measures in response to the
spread of COVID-19, as well as to the global
economic slowdown. Meanwhile, China ex-
perienced a sharp decline in economic growth
due to its continued zero-COVID policy and
extended slump in the real estate market.3) In-
dia sustained its favorable upward trend until
the third quarter, but later entered a gradual
economic slowdown owing to a worsening of
domestic and external conditions. In the ASE-
AN-5 countries, a favorable economic recov-
ery trend continued thanks to strong exports
and a rise in the number of foreign tourists
stemming from the resumption of cross-bor- Figure Ⅰ- 3. Changes in Global Trade Growth1)
der travel. Into the fourth quarter, however, it
(%) (%)
weakened due to a deterioration of domestic
20 20
and external conditions, such as the economic
15 15
slowdown in major countries and the slug-
10 10
gishness in the IT sector.
5 5
0 0
Downturn of Global Trade
-5 -5
-10 -10
The recovery of global trade weakened,
-15 -15
affected by the global economic slowdown.4)
Entering the second half of the year, trade in -20 -20
2013 2016 2019 2022e
goods saw its growth trend slow, influenced
Note: 1) Based on trade of goods and services.
by global supply chain disruptions and weak- Source: IMF
3) China’s real estate market has maintained a downward trend since the second half of 2021 due to the decline of the
country’s economic growth, strengthened restrictions, and deterioration in consumer sentiment. In particular, since
the China Evergrande Group issue (September 2021), market risks were expanded in relation to a rise in debt de-
faults among real estate development companies caused by the deterioration of financing conditions.
4) Global trade growth (based on IMF statistics): -7.8 percent in 2020 → +10.4 percent in 2021 → +5.4 percent in 2022.
ened economic trends in major countries.
5
Trade in services showed a modest upward
trend, centered on tourism services thanks to
the alleviation of entry restrictions.
Expansion of Volatility in International Oil

Figure Ⅰ- 4. International Oil Prices (monthly
Prices average)
1. Real Economy
Dubai Brent WTI
International oil prices (based on Dubai (dollar/barrel) (dollar/barrel)
crude oil prices) fluctuated at a generally 140 140
higher level compared to 2021, while exhib-

120 120
iting high volatility.5) During the first half of
the year, oil prices soared, affected by con-
100 100
cerns over disruptions in the crude oil supply
from Russia because of the Russia-Ukraine 80 80
war. During the second half of the year, pric-

60 60
es fell to around the 70-dollar range due to
heightened concerns over the global economic
40 40
downturn. 21.1 4 7 10 22.1 4 7 10
Sources: Bloomberg, Reuters
Significant Expansion of Global Inflation
Figure Ⅰ- 5. CPI Inflation in Major Countries

While global inflation sustained its high
upward trend throughout 2022, the uptrend U.S. Euro Area1)
U.K. Emerging Economies2)
began to weaken gradually in the second half
(YoY, %) (YoY, %)
of the year. In the first half of the year, the 12 12
growth margin in prices rose significantly
10 10
in both major advanced economies and in
emerging countries, affected by an increase 8 8
in global commodity prices, including oil

6 6
prices and food prices, resulting from the Rus-
sia-Ukraine war. After mid-2022, global infla- 4 4
tion began to slow in line with rising down- 2 2

ward pressure on the economy, in addition to
0 0
a considerable alleviation of supply-side infla- 21.1 4 7 10 22.1 4 7 10
tionary pressure due to a decline in interna- Notes: 1) Based on HICP.

tional oil prices. However, the time and pace 2) Average of Brazil, Russia, India, and South Africa.
Sources: Statistics agencies of individual countries
5) International oil prices (annually averaged per barrel based on Dubai crude oil prices): 42.2 dollars in 2020 → 69.0
dollars in 2021 → 97.0 dollars in 2022.
of the slowdown in inflation varied somewhat
6
depending on the country.
B. Domestic Economy
In 2022, although consumption contin-

ued to undergo a rapid recovery, the Korean
economy exhibited a lower growth rate than
the previous year because of slow growth in
exports. The employment status exhibited a
favorable trend with a significant increase in
the number of persons employed, centered on
the service sector. Consumer price inflation
recorded its highest figure since 1998 with ris-
ing pressure on both the demand and supply
sides, and the growth of core inflation also hit
a record high since 2008. In the meantime, the
current account saw its surplus considerably
narrow owing to a rise in imports resulting
from a surge in raw material prices.
Figure Ⅰ- 6. GDP Growth and Contributions by

(1) Economic Growth Expenditure Item (in real terms)1)
Final Consumption Gross Capital Formation

Slowdown in Domestic Economic Growth Exports Imports
GDP
(%, %p) (%, %p)
In 2022, the Korean economy witnessed 10 10
GDP growth of 2.6 percent in real terms,

8 8
which fell from 4.1 percent in 2021, as export
6 6
growth slowed and investment was also slug-
gish, affected by weakened global economic 4 4
growth and global supply disruptions, despite 2 2
a rise in consumption buoyed by the lifting of 0 0

social distancing measures.6) In particular, as
-2 -2
the global economic slowdown intensified in
-4 -4
the second half of the year, GDP growth stood 2013 2016 2019 2022p
at 2.2 percent year-on-year, lower than 3.0 Notes: 1) Preliminary figures for 2021 and 2022.
percent in the first half of the year. Source: Bank of Korea
6) GDP growth in real terms: -0.7 percent in 2020 → +4.1 percent in 2021 → +2.6 percent in 2022.
7) Change in final consumption expenditure in real terms: -2.2 percent in 2020 → +4.2 percent in 2021 → +4.3 percent
in 2022.
Examining the components of demand,
Figure Ⅰ- 7. C
hanges in Consumption (in real
7
overall consumption (final consumption ex- terms)
penditure) rose by 4.3 percent year-on-year as
(%) (%)
the growth of private consumption expanded 8 Consumption (final consumption expenditure) 8
Private
despite a slowdown in the growth of govern- 6
Government
6
ment consumption.7) In spite of constraints, 4 4
including high inflation, interest rate hikes, 2 2
1. Real Economy
and a decrease in housing prices, private con- 0 0
sumption increased by 4.3 percent year-on- -2 -2
year, driven by a surge in services consump- -4 -4
tion due to an easing of quarantine measures, -6 -6

2013 2016 2019 2022p
in addition to improvements in income condi-
Source: Bank of Korea
tions, such as employment and wages.8) How-
ever, approaching the year-end, the upward Figure Ⅰ- 8. Changes in Fixed Investment (in real
trend slowed as pent-up demand weakened. terms)
Fixed investment (gross fixed capital for- (%)

Fixed Investment (gross fixed capital formation)
(%)
Construction Investment Facilities Investment
mation) diminished by 0.8 percent year-on- 20 20
Intellectual Property Products Investment
year with a decline in both construction and 15 15
facilities investment.9) Facilities investment de- 10 10

creased by 0.5 percent from the previous year,
5 5
influenced by disruptions in the supply of
0 0
automobile semiconductors and China’s lock-
down measures, although major IT companies -5 -5
continued to make large-scale investments. -10 -10

2013 2016 2019 2022p
Construction investment fell by 3.5 percent
from the previous year because of disruptions
in the supply of construction materials re-
Figure Ⅰ- 9. Changes in Exports (in real terms)
sulting from the Russia-Ukraine war and the
sluggishness in the real estate market. Invest- (%) (%)
15 15
ment in intellectual property products rose by Exports of Goods Exports of Services
Gross Exports
4.7 percent as investments in both R&D and
10 10
other intellectual property products increased.
Exports of goods and services in real terms 5 5
recorded an increase of 3.2 percent year-on-
year, falling from 2021, as growth in major 0 0
countries slowed and the positive effects of the

pandemic that had been working in favor of -5 -5
2013 2016 2019 2022p
such exports (e.g., increased demand for non- Source: Bank of Korea
8) Change in disposable income in real terms based on “Household Income and Expenditure Survey” conducted by
Statistics Korea: +0.7 percent in 2021 → +2.0 percent in 2022. Number of persons newly employed: 816,000 per-
sons in 2022 (245,000 persons on average between 2015 and 2019).
9) Change in gross fixed capital formation in real terms: +3.5 percent in 2020 → +2.8 percent in 2021 → -0.8 percent in
2022.
face-to-face goods) weakened.10) Approaching
8
the second half of the year, the sluggishness
in exports of goods expanded, due to the
Figure Ⅰ- 10. G
DP Growth and Contributions by
prolonged continuation of China’s lockdown Economic Activity (in real terms)
measures and the downturn in the IT sector.
Agriculture, Forestry & Fishing Manufacturing
The growth rate for exports of services was Electricity, Gas & Water Supply Construction
also significantly reduced because of a decel- Services Taxes Less Subsidies on Products
GDP
eration in global cargo volumes.
(%, %p) (%, %p)
Imports of goods and services in real terms 6 6
climbed 3.7 percent, lower than the previous

year, affected by the sluggishness in imports 4 4
of services due to a delay in the recovery of
demand for overseas travel, amid the weak-
2 2
ened growth in imports of goods because of
a decline in exports and a slump in domestic
0 0
demand.11)
-2 -2
Slowdown in Manufacturing Growth and In- 2013 2013 2019 2022p
crease in Services Growth Source: Bank of Korea
An overview of production activities across

various sectors (based on GDP) in 2022 shows
Table Ⅰ- 1. Growth Rate of Manufacturing by
that growth was sluggish in the manufactur- Sector
ing sector while it accelerated in the service (%)
sector, particularly in face-to-face services. 2017 2018 2019 2020 2021p 2022p
The construction industry shifted to a rise on Manufacturing 3.7 3.3 1.1 -1.1 6.9 1.4
the back of an increase in construction sites Chemicals

and Chemical 3.4 2.5 -0.9 -0.3 5.7 -3.7
that had accumulated over the past one to two Products
years. Basic Metals 2.9 -3.8 -0.9 -3.3 5.6 -5.7
The manufacturing sector registered its Fabricated
-0.3 -1.3 -1.8 -6.3 -3.5 -4.0
Metal Products
growth rate at 1.4 percent, far lower than 6.9
Computers,
percent in 2021, as growth slowed in the IT Electronics,
4.8 11.4 6.4 5.2 12.9 7.9
sector, while non-IT sectors also faced a slump and Optical
Products
in general. By sector, the margin of growth in Machinery and
22.5 0.7 -0.9 1.0 11.2 1.6
the computers, electronics, and optical devices Equipment
sector, including semiconductors, narrowed Transportation
-8.1 -2.3 1.9 -10.1 5.4 9.2
Equipment
due to the downturn in the global IT sector.
10) Change in exports of goods and services in real terms: -1.7 percent in 2020 → +10.8 percent in 2021 → +3.2 per-
cent in 2022.
11) Change in imports of goods and services in real terms: -3.1 percent in 2020 → +10.1 percent in 2021 → +3.7 per-
cent in 2022.
Non-IT sectors, such as chemical products
Table Ⅰ- 2. Growth Rate of Services by Sector 9
and basic metals, were also mostly sluggish,
(%)
although the transportation equipment sector, 2017 2018 2019 2020 2021p 2022p
including automobiles, saw its growth expand Services 2.6 3.8 3.4 -0.8 3.8 4.2
thanks to the alleviation of global supply dis- Wholesale & Retail
Trade, Accommo-
ruptions. 1.8 2.9 3.5 -5.6 3.4 6.8
dation and Food
The service sector registered its growth Services
1. Real Economy
rate at 4.2 percent, higher than 3.8 percent in Transportation &
2.7 3.7 1.7 -17.3 5.3 9.2
Storage
2021. By sector, face-to-face sectors, such as
Finance & Insur-
wholesale & retail trade, food services & ac- 4.2 5.6 3.4 9.6 6.7 2.4
ance
commodations, and transportation & storage, Business Activities 2.0 3.8 2.6 0.1 2.8 2.5
witnessed their recovery expand considerably, Human Health &
6.4 8.2 9.8 1.1 5.2 6.2
Social Work
buoyed by the easing of quarantine measures.
The business activities and the human health
& social work sectors also sustained a favor-
able uptrend.
The construction sector climbed by 0.3
percent year-on-year, led by the building
construction business. The growth rate for
the agriculture, forestry, and fishing sector
shifted to a decrease, registering minus 1.3
percent, while the electricity, gas, and water
supply sector continued its upward trend with
a growth rate of 1.9 percent.
(2) Employment and Wages

Figure Ⅰ- 11. Changes in Employment Figures by
Industry
Significant Increase in the Number of Per-
Manufacturing Services
sons Employed Construction Agriculture, Forestry & Fishing
Other Total
(10,000 persons) (10,000 persons)

Overall employment conditions sustained 100 100
a favorable trend, with the number of persons 81.6
80 80
employed surging by 816,000 due to the ef-
60 60
fects of the resumption of economic activities
36.9
following the pandemic. 40 31.6
30.1
40
By industry, the number of persons em- 20 20
ployed increased most in the service sector. 9.7

0 0
Although employment remained sluggish in
-20 -20
several face-to-face service sectors, such as -21.8
wholesale & retail trade, and personal ser- -40

2017 2018 2019 2020 2021 2022
-40
vices, those in human health & social work,

Source: Statistics Korea
and in food ser v ices & accommodations
Figure Ⅰ- 12. Changes in Employment Figures by
10
continued to grow at a rapid rate, buoyed by Employment Status
increased demand for care and social wel-
Wage Workers Non-Wage Workers
fare services and the return to normalcy. The Regular Employees Temporary Employees
Day Workers
number of persons employed in the manufac-
turing sector shifted to a rise for the first time 100 100
in seven years, influenced by the improvement

80 6.8 80
in business conditions in the electrical and
60 60
electronic sectors, while the margin of growth
in the number of persons employed in the 40 74.9 40
5.1
construction sector narrowed. 20
35.7
42.1 20
26.5
By employment status, the number of wage 0
15.0
0
-5.2 -5.6 -10.8 -5.3
workers employed soared at a rapid rate, cen- -11.0
-20 -20
tered on regular workers, and that of non-
-40 -40
wage workers employed also shifted to a rise. 2017 2018 2019 2020 2021 2022
By age, the number of employees aged 30 to Source: Statistics Korea
59 and employees aged 60 or older rose sig-

nificantly, while the margin of growth among
those employed aged 15 to 29 slightly expand-
Figure Ⅰ- 13. C
hanges in Employment Figures by
ed. Age
Boosted by a rise in the number of persons
15- to 29-Year-Olds 30- to 59-Year-olds
employed, the employment rate increased by 60-Year-Olds or Older Total
1.6 percentage points over the previous year. (10,000 persons) (10,000 persons)
100 100
The total unemployment rate decreased by 0.8 81.6
80 80
percentage points, year-on-year, to 2.9 per-
60 60
cent. The youth unemployment rate, covering 36.9
40 40
people aged 15 to 29 fell from a year earlier by 31.6 30.1
1.4 percentage points to reach 6.4 percent. 20 20

9.7
0 0
-20 -20
-21.8
-40 -40
-60 -60
2017 2018 2019 2020 2021 2022
Source: Statistics Korea

Increase in Wage Growth
Table Ⅰ- 3. Employment-Related Indicators 11
(10,000 persons, %)
Nominal wage growth recorded 4.9 percent,
2017 2018 2019 2020 2021 2022
an increase from 4.6 percent in 2021. By em- Economically
2,775 2,790 2,819 2,801 2,831 2,892
ployment status, regular workers saw a rise Active Population
in wage growth, in line with a sharp increase Change Rate 1.2 0.5 1.0 -0.6 1.1 2.2
in fixed wages resulting from a solid labor Labor Force Par-

63.2 63.1 63.3 62.5 62.8 63.9
ticipation Rate
1. Real Economy
market and high inflation expectations. In the Employed Per-
2,672 2,682 2,712 2,690 2,727 2,809
meantime, wage growth narrowed among sons
temporary and day workers. Change 31.6 9.7 30.1 -21.8 36.9 81.6
The growth rate for unit labor cost (non-farm Unemployment

3.7 3.8 3.8 4.0 3.7 2.9
Rate
basis) expanded as nominal hourly wages rose (15- to 29-year-
9.8 9.5 8.9 9.0 7.8 6.4
steeply despite a decline in labor productivity. olds)
Employment
60.8 60.7 60.9 60.1 60.5 62.1
Rate
(3) Prices (15- to 64-year-
66.6 66.6 66.8 65.9 66.5 68.5
olds)
Highest Consumer Price Inflation Since 1998 Source: Statistics Korea
In 2022, consumer price inflation was 5.1

percent year-on-year, significantly surpassing
Figure Ⅰ- 14. W
age Growth by Employment
the inflation target of 2.0 percent, to record Status
the highest figure since the 7.5 percent seen in
2021 2022
1998. In terms of trends throughout the year, it (%) (%)
steeply rose from the 3 percent range earlier in 20 20
the year, and then hit a record high of 6.3 per-

cent for the year in July. It somewhat slowed 15 14.3 15
to the 5 percent range at year-end 2022, but

remained above the inflation target. 10
10.4
10
The expansion of the upward inflation trend
5.2 5.7
stemmed from an increase in supply-side 4.6
4.9 4.7 4.3
5 3.7 3.9 5
3.4
inflationary pressures due to a surge in in- 2.8
ternational commodity prices resulting from

0 0
the Russia-Ukraine war, as well as a rise in Nominal Regular (Regular (Overtime (Special Temporary
wage Employee Payment) Payment) Payment) & Day
demand-side inflationary pressures owing to Worker
the easing of quarantine measures. However, Source: Ministry of Employment and Labor
as the supply-side inflationary pressures were

substantially mitigated by a decrease in inter-
national oil prices and the downward pressure
on the economy gradually increased in the
second half, the high inflation trend some-
what slowed.
By item, the upward trend in the prices of
12 Table Ⅰ- 4. Growth in Wage Indicators
agricultural, livestock, and fisheries products
(%)
expanded due to deteriorating weather condi- 2016 2017 2018 2019 2020 2021
tions, but fell considerably in the fourth quar- Nominal Wage1) 3.3 5.3 3.4 1.1 4.6 4.9
ter. Among industrial products, the prices of (Real Wage) 2)
1.3 3.7 3.0 0.5 2.0 -0.2
petroleum products rapidly rose in line with a Nominal Hourly
5.2 6.8 3.9 2.6 4.5 6.2
Wage3)
surge in international oil prices in the wake of
Labor Productivity4) 3.9 4.5 1.9 1.8 2.8 1.4
the Russia-Ukraine war, and then entering the
Unit Labor Costs 5)
1.3 2.2 2.0 0.8 1.7 4.7
second half of the year, the margin of growth
Notes: 1) Based on businesses employing at least one regular em-
in prices narrowed substantially as interna- ployee, non-farm basis.
tional oil prices declined due to concerns over 2) Nominal wage/CPI.

3) Nominal wage/hours worked.
the sluggishness in demand. On the other 4) Real gross added value/(total employed persons × hours
hand, the prices of other industrial products, worked), non-farm basis.

5) Nominal hourly wage/labor productivity.
excluding petroleum products, gradually ex- Sources: M
inistry of Employment and Labor, Statistics Korea, Bank of
panded with a rising trend, centered on pro- Korea
cessed food, due to the delayed reflection of

the preceding increase in raw material prices,
including international food prices. Electricity,
Figure Ⅰ- 15. M
ajor Inflation Indexes
gas, and other bills also consistently expanded
in an upward trend, as the burden of rising Consumer Price Index (left) Excluding Food and Energy (left)
Producer Price Index (left) Import Price Index (right)
costs began to be reflected. 12)
In the case of
(YoY, %) (YoY, %)
overall service price inflation, while the prices 12 40
of public services continued a slow rising trend

9 30
at below 1 percent, along with housing rental
prices rising moderately at a slower pace, the 6 20
prices for personal services sustained a high

3 10
uptrend, particularly in dining-out costs.
In 2022, the growth of core inflation (CPI, 0 0
excluding food and energ y) soared to 3.6 -3 -10

21.1 4 7 10 22.1 4 7 10
percent, the highest level since the 3.6 per-
Sources: Statistics Korea, Bank of Korea
cent seen in 2008, centered on the prices for
personal services, including dining-out costs.
In terms of trends throughout the year, even
after July when the growth of consumer price
inflation peaked, core inflation continued a
rising trend for four months, and then slightly
slowed toward the year-end.
12) In 2022, electricity bills increased by a total of 19.3 won/kWh, being raised in April, July, and October, and gas bills
rose by a total of 5.47 won/MJ, being raised in April, May, July, and October.
Decline in Housing Sale Prices and Lease-
Figure Ⅰ- 16. C
PI Inflation and Contribution by
hold Deposit Prices 13
Item
Agricultural & Marine Products Industrial Products
Housing sale prices dropped by 4.7 percent Electricity, Gas & Water Supply Services
Consumer Price Index CPI Excluding Food & Energy
throughout the year, sustaining a declining
(%, %p) (%, %p)
trend following June due to a rise in interest 6 6
5.1
rates and weakened expectations for housing 5 5
1. Real Economy
price increases.13) By region, the Seoul metro- 4 4
politan area significantly decreased, centered
3 2.5 3
on certain neighborhoods14) that experienced a
2 1.5 2
substantial growth margin in 2021. As for the
1 0.4 0.5 1
rest of the country, amid heightened down-
0 0
ward trends in Daegu, Daejeon, and Sejong,
-1 -1
most other cities also saw a declining trend. 2018 2019 2020 2021 2022
Leasehold deposit prices also declined, as Source: Statistics Korea
the demand for leaseholds shifted in favor of

monthly housing rentals owing to lending rate Table Ⅰ- 5. Rate of Increase in Housing Prices
hikes.15) In the meantime, monthly housing and Housing Leasehold Deposits
(compared to the last survey dates of
rental prices climbed slightly due to the ex- the previous periods)
pansion of demand. (%)
06~10 11~15 16~20 2022

2021
(4) Current Account avg. avg. avg. Year H1 H2
Housing
5.2 2.0 1.7 9.9 -4.7 0.2 -4.9
Prices
Contraction in Current Account Surplus Seoul Metro-
7.9 0.2 2.8 12.8 -6.5 -0.1 -6.4
politan Area
The current account in 2022 significantly Non-Seoul
Metropolitan 2.4 4.1 0.6 7.4 -3.0 0.5 -3.5
narrowed to a surplus of 29.8 billion dollars Area
compared to the previous year due to the de- Housing
teriorated goods account. The goods account
16) Leasehold 4.7 5.2 0.7 6.5 -5.6 0.0 -5.6
Deposits
surplus shrank, led mainly by a rise in imports
Housing
resulting from a surge in energy and raw ma- Monthly Rent .. .. -0.3 2.6 1.0 0.9 0.1
Prices
terial prices, as well as partly by a slowdown
Source: Korea Real Estate Board
in exports due to weakened growth trends in
major countries and a downturn in the IT in-
13) Housing sale prices dropped by 14.3 percent throughout the year based on the nationwide transaction-based price
index (based on sale prices of apartments and houses).
14) In 2021, housing sale prices in Siheung and Uiwang in Gyeonggi-do and in Yeonsu-gu in Incheon increased sub-
stantially, by 30.4 percent, 30.0 percent, and 34.7 percent, respectively, due to expectations surrounding a met-
ropolitan transportation network (GTX, Great Train eXpress), but in 2022, prices in those areas declined by 10.4
percent, 12.7 percent, and 15.0 percent, respectively (compared to the last survey dates of the previous periods).
15) Leasehold deposit prices dropped by 9.4 percent throughout the year based on the nationwide transaction-based
price index (based on leasehold deposit prices for both apartments and houses).
16) Current account: +59.7 billion dollars in 2019 → +75.9 billion dollars in 2020 → +85.2 billion dollars in 2021 → +29.8
billion dollars in 2022.
dustry. The services account deficit narrowed
14 Figure Ⅰ- 17. C
urrent Account
owing to the robust transport account, sup-
ported by a high level of overseas freight rates, Goods Services
Primary Income Secondary Income
while the primary income account surplus
Current Account
expanded, led by a decline in dividend income (100 million dollars) (100 million dollars)
through securities investments. 1,500 1,500
1,200 1,200
Gradual Slowdown of Goods Exports Fol- 900 900

lowing a Favorable Trend
600 600
300 300
Exports on a customs clearance basis stood
at 683.6 billion dollars, maintaining their re- 0 0
cord high for two consecutive years,17) boosted -300 -300
by an uptrend in the first half of the year, but -600 -600

2013 2016 2019 2022p
into the second half of the year, exports be-
came sluggish, particularly to China and from Source: Bank of Korea
the IT sector, thereby exhibiting a distinct

trend where the figures increased in the first
Table Ⅰ- 6. Exports by Major Item
half and declined in the second half of the
(%)
year. 2021 2022
Exports of IT products, including semicon- % % Share % % Share
ductors, increased at a slower pace compared Change of total Change of total
IT Products 24.0 <35.3> 2.5 <34.1>
to the previous year due to a downturn in
Semiconductors 28.1 <20.2> 1.3 <19.3>
global demand led by China and a decline in
Wireless Communi-
unit prices. In particular, exports of wireless 24.7 <3.0> -10.4 <2.5>
cation Equipment
communication equipment were stagnant. Display Panels 18.9 <3.3> -1.1 <3.1>
In terms of non-IT products, exports of most Computers 27.0 <2.6> 7.8 <2.6>
cyclical products, including chemical and Non-IT Products 26.7 <64.7> 8.1 <65.9>
machinery products, also slowed. However, Automobiles 38.1 <14.3> 6.6 <14.3>
exports of automobiles sustained favorable Petroleum Products 23.8 <10.8> 12.3 <11.4>
growth thanks to the alleviation of supply Chemical Products 57.0 <6.0> 63.1 <9.3>
disruptions and to robust sales of eco-friendly Machinery Products 10.5 <8.9> 0.3 <8.4>
Ships 32.9 <8.2> 5.1 <8.1>
vehicles, and those of petroleum products also
Total Exports 1)
25.7 [6,444] 6.1 [6,836]
rose substantially due to the continued high
Note: 1) Figures in square brackets are the total amount of exports (in
levels of energy prices. hundred millions of USD).
Sources: K
orea International Trade Association, Korea Customs
Service
Sharp Rise in Imports of Goods
Imports on a customs clearance basis stood

at 731.4 billion dollars, also maintaining their
17) Top three highest annual exports: (1) 683.6 billion dollars in 2022, (2) 644.4 billion dollars in 2021, (3) 604.9 billion
dollars in 2018.
record high for two consecutive years, owing
Table Ⅰ- 7. Imports by Major Item 15
to a surge in energy imports.18) Imports of
(%)
raw materials surged, led mainly by crude oil, 2021 2022
gas, and coal, affected by the global energy % % Share % % Share
supply problem. Imports of capital goods and Change of total Change of total
Crude Material & Fuel 46.7 <49.2> 30.1 <53.8>
consumer goods also increased, centered on
Energy 54.2 <18.3> 69.7 <26.1>
electric and electronic machinery, and grains
Capital Goods 20.2 <34.6> 7.5 <31.3>
1. Real Economy
and direct consumption goods (food and bev-
Electric·Electronic
erages), respectively. 21.5 <20.7> 13.4 <19.8>
Machinery
Machinery·Precision
20.9 <11.4> -1.9 <9.4>
Equipment
Continued Services Account Deficit
(Semiconductor
Manufacturing 50.1 <4.3> -10.6 <3.2>
The margin of services account deficit re- Equipment)
mained at a similar level to 2021, registering Consumer goods 18.3 <16.2> 9.1 <14.9>
5.5 billion dollars, mainly attributable to Total Imports1) 31.5 [6,151] 18.9 [7,314]
Note: 1) Figures in square brackets are the total amount of imports (in
special factors related to the pandemic.19) The
hundred millions of USD).
transport account surplus greatly widened, Sources: K
orea International Trade Association, Korea Customs
Service
boosted by continued rising freight rates fol-
lowing last year. The travel account deficit
remained below the
Figure Ⅰ- 18. Services Account
pre-pandemic level due to a continued
contraction in overseas travel by domestic Manufacturing Services Transport
Travel Construction Services
residents. The deficit in the manufacturing
Other Services1) Services
services account was similar to that in the (100 million dollars) (100 million dollars)
previous year. 300 300
200 200
(5) Regional Economic Trends 20) 100 100
0 0
Regarding production activities by region, -100 -100
manufacturing production increased in most -200 -200
regions, but it sustained a similar level to -300 -300
the previous year in the Honam region. In -400 -400

the Chungcheong region, it declined due to -500 -500
2013 2016 2019 2022p
sluggishness in the IT sector, and in the Da-
egyeong region, it also decreased because of Note: 1) Total of other service accounts including other business
services, telecommunications, computers, and information
the flooding of POSCO facilities and the slow- services.
down in demand for mobile phones. Services Source: Bank of Korea
18) Past four years imports of energy: 108.6 billion dollars in 2019 → 73.0 billion dollars in 2020 → 112.6 billion dollars in
2021 → 191.0 billion dollars in 2022.
19) Service account: -26.8 billion dollars in 2019 → -14.7 billion dollars in 2020 → -5.3 billion dollars in 2021 → -5.5 bil-
lion dollars in 2022.
20) For detailed information on regional economic trends in 2022, see the Regional Economic Report (Quarterly) pub-
lished by the Bank of Korea, such as the March 2022 issue, June 2022 issue, September 2022 issue, and Decem-
ber 2022 issue.
production grew across all regions, led by food
16 Table Ⅰ- 8. Major Indicators by Region1)p
services & accommodations, and transport &
warehousing, thanks to a rise in face-to-face Seoul
Dong Chung Dae Gang
Metro Honam Jeju
activities due to the lifting of social distancing nam cheong gyeong won
politan
measures. Production
In terms of domestic demand trends,21) pri- Manufacturing Production
3.7 3.2 -0.5 0.0 -0.7 6.0 1.4
Index2)
vate consumption on a retail sales index basis
Services production index2) 4.9 4.9 4.2 3.5 3.0 5.5 8.6
dropped across all regions, except for in the
Demand
Dongnam region, due to a rise in prices and
Retail Sales Index2) -0.2 0.7 -0.9 -1.5 -0.4 -0.6 -0.1
interest rates. The Business Survey Index (BSI)
Facilities Investment BSI 3)
97 92 95 94 92 94 97
for facilities investment declined across all re-
Area of New Construction2) -21.5 2.2 -14.8 -26.7 -21.2 -16.1 9.3
gions, except for in the Jeju region, affected by Exports4) 2.5 9.5 4.9 12.5 10.2 0.7 -13.9
the uncertainty surrounding the global econo- Employment
my, thereby falling short of the reference value Changes in Number of
55.7 4.1 8.2 0.5 6.2 0.8 1.9
of 100. In terms of construction investment, Employed Persons5)
Unemployment Rate 3.0 3.1 2.3 2.9 2.7 3.2 2.1
due to sluggish housing demand, the total
Prices
area of new construction projects decreased
CPI2) 4.8 5.0 5.5 5.4 5.5 6.0 5.9
across all regions, except for in the Dongnam
Housing Sales Prices6) -6.5 -3.8 -3.6 -1.2 -4.2 0.5 -0.2
and Jeju regions. Exports rose at a slower pace
Housing Leasehold
across most regions compared to the previous -8.0 -3.2 -4.2 -1.6 -5.0 -0.3 0.0
Deposit Prices6)
year, influenced by sluggish global demand.
Notes: 1) T he Seoul metropolitan region includes Seoul, Incheon,
The Jeju region witnessed a decline in exports, and Gyeonggi-do(in case of Facilities Investment BSI, Seoul
centered on agricultural products and semi- is excluded). The Dongnam region includes Busan, Ulsan,
and Gyeongsangnam-do. The Daegyeong region includes
conductors. Daegu and Gyeongsangbuk-do.
In terms of employment conditions, the 2) Year-on-year rates of change.
3) Base = 100.
number of persons employed increased across 4) Customs-clearance basis, year-on-year rates of change.
all regions. Unemployment rates also main- 5) Year-on-year change (10,000 persons).
6) R
ates of change compared with the last months of previous
tained a low level across most regions. year.
Amid a continued rise in the prices of pe- Sources: B
ank of Korea, Statistics Korea, Ministry of Land,
Infrastructure, and Transport, Korea Customs Service,
troleum products, consumer prices recorded Korea Real Estate Board
a high growth rate across all regions, as the
prices of processed food and dining-out costs
saw growth expand, stemming from an in-
crease in international food prices, in addition
to a hike in electricity and gas charges.
In the meantime, housing sale prices and
leasehold deposit prices shifted to a decline
across most regions, led by the Seoul metro-
politan area and other cities.
21) Trends in regional consumption, facilities investment, and construction investment are estimated using retail sales
indexes, the facilities investment BSI, and the total area under new construction.
2. Financial and Foreign Figure Ⅰ- 19. M
ajor International Interest Rates
17
Exchange Markets and EMBI+ Spread
U.S. Government Bond Yield (10-year)
German Government Bond Yield (10-year)
A. International Financial Markets EMBI+ Spread

(%) (%)
8 7
In 2022, international financial markets 7

6
2. Financial and Foreign Exchange Markets

exhibited a contraction in investor sentiment 6
5
5
and large fluctuations in price variables due
4
4
to contractionary monetary policies of central
3 3
banks in major countries, resulting from rising 2
2
inflation amid the prolonged Russia-Ukraine 1
1
war, as well as growing uncertainty regarding 0
0
economic prospects for the future. -1
-2 -1
13 16 19 22 22 .1 7 12
Sharp Rise in Long-Term Interest Rates Sources: Bloomberg, JP Morgan
Long-term interest rates on a 10-year U.S.

Table Ⅰ- 9. Major International Interest Rates and
Treasury bond yield basis rose considerably, in Risk Premiums (as of period–end)
line with interest rate hikes by the U.S. Fed- (%, bp)
eral Reserve22) in response to rising inflation. 2022

2021
Ⅰ Ⅱ Ⅲ Ⅳ
Entering June, U.S. long-term interest rates,
Government Bond Yield
which had exhibited an uptrend from earlier (10-year)
in the year, saw growth slow due to height- (U.S.) 1.51 2.34 3.01 3.83 3.87
ened concerns over economic sluggishness (Germany) -0.18 0.55 1.34 2.11 2.57
stemming from steep interest rate hikes, but Risk premium
they continued their upward trend on the (U.S. corporate Bond
186 189 236 220 188
Spread)1)
whole as the U.S. Federal Reserve strongly
(EMEs CDS Premium)2) 187 228 339 332 239
sustained its policy tightening stance.23) Ger-
(EMEs Spread)3) 386 368 461 467 375
many’s long-term rates also sharply rose due
Notes: 1) Yield on 10-year corporate bonds (Baa).
to rising inflation24) and interest rate hikes by 2) Weighted average of 18 EME CDS premiums, by Markit.
the European Central Bank (ECB),25) showing 3) JP Morgan EMBI+ (Emerging Markets Bond Index Plus).
Sources: Bloomberg, JP Morgan, Markit
a similar trend to that in the U.S.
22) In 2022, the U.S. Federal Reserve raised its policy rate by a total of 425 bp over seven occasions, starting with an
increase of 25 bp at the March FOMC meeting. In particular, from June to November, it raised the policy rate by 75
bp over four consecutive meetings.
23) In particular, market expectations for further U.S. interest rate hikes rose significantly when Federal Reserve Chair-
man Jerome Powell reaffirmed price stability as a priority at the Jackson Hole Economic Policy Symposium, held
on August 26.
24) Consumer price inflation in the euro region rose year-on-year from 7.4 percent in March to 10.6 percent in October.
25) At the July Monetary Policy Committee meeting, the ECB initially raised the policy rate by 50 bp in 2022 and raised
it again by a total of 250 bp over four occasions throughout the year.
The Emerging Markets Bond Index Plus
18
(EMBI+) spread soared immediately after
Russia’s invasion of Ukraine, but gradually
stabilized over time. Later, it fluctuated in line
with changes in expectations of major coun-
tries’ monetary policy tightening, and from
November onward, it dropped due to the sta-
bilization of U.S. inflation26) and the easing of
China’s zero-COVID policy.27)
Decline in Stock Prices in Advanced and

Emerging Countries
The U.S. Dow Jones Industrial Average de-

Figure Ⅰ- 20. Stock Indexes in Major Advanced
clined due to weakened investor sentiment Economies & MSCI Emerging
Markets Index
stemming from the outbreak of the Rus-
sia-Ukraine war and interest rate hikes by the Dow Jones Euro Stoxx 600
MSCI EM
U.S. Federal Reserve. From October onward,
(2013.1.1.=100) (2013.1.1.=100)
however, it rebounded thanks to expectations 300 300
for easing the pace of monetary policy tight-

ening stemming from the slowdown in infla- 250 250
tion,28) in addition to solid earnings reports at

200 200
companies. The STOXX Europe 600 Index also
decreased owing to mounting concerns over 150 150
an economic recession amid interest rate hikes

by the ECB. The MSCI Emerging Markets 100 100
Index mostly showed a similar trend to stock

50 50
indexes in advanced economies, influenced by 13 16 19 22 22.1 7 12
changes in global investor sentiment. Source: Bloomberg.
Strong U.S. Dollar Against Euro and Yen
The U.S. dollar was significantly strength-

ened by the U.S. Federal Reserve’s tightened
monetary policy stance. In 2022, the currency
26) Consumer price inflation in the U.S. dropped year-on-year from 9.1 percent in June to 6.5 percent in November.
27) On November 10, Chinese President Xi Jinping instructed that efforts should be made to minimize the impact of
COVID-19 policy on the economy, and Chinese health authorities later announced a series of measures to ease
restrictions, such as shortening the quarantine period, reducing PCR test requirements, and lifting lockdowns in
high-risk areas.
28) In October, the U.S. consumer price inflation year-on-year stood at 7.7 percent, below market expectations of 7.9
percent (November 10).
appreciated against the euro and the yen by 6.3
Figure Ⅰ- 21. USD per EUR and JPY per USD
19
percent and 13.9 percent, respectively. It ex- Exchange Rates
hibited a considerably strong tendency against
USD per EUR (left, inverted) JPY per USD (right)
the euro, affected by intensified concerns (USD per EUR) (JPY per USD) (USD per EUR) (JPY per USD)
over an economic slowdown in the euro area 0.9 160 0.90 160
stemming from the prolonged Russia-Ukraine 150

1.0 0.95
150
war, but from October onward, it appreciat- 140

ed at a slower pace due to the contractionary 1.1 130 1.00
140
120
monetary policy at the ECB29) and the easing 1.2 1.05
110
of concerns over U.S. inflation. The U.S. dol- 130
1.3 100 1.10
lar displayed a relatively favorable upswing
90 120
against the Japanese yen because of the ac- 1.4 1.15
80
commodative monetary policy stance at the
1.5 70 1.20 110
Bank of Japan, but from the end of October, 13 16 19 22 22.1 7 12
the degree of dollar strength narrowed again, Source: Reuters
owing to Japanese authorities’ intervention in

dollar sales30) and changes in the yield curve
control policy at the Bank of Japan.31)
B. Domestic Financial Markets
In 2022, domestic financial markets were

significantly influenced by monetary policy
normalization at home and abroad. Long-term
market interest rates rose substantially due to
the spread of global inflation and an intensi-
fied increase in policy rates in major countries,
while short-term market interest rates also
rose due to Base Rate hikes. In particular,
corporate bond yields and CP rates increased
considerably, influenced by the PF-ABCP
market instability in October, and then their
growth rate was reduced owing to market
stabilization measures by the government and
the Bank of Korea, as well as the expectation
29) At the July Monetary Policy Committee meeting, the ECB raised the policy rate by 50 bp, and again at the Septem-
ber and October meetings by 75 bp.
30) The Ministry of Finance in Japan announced that it conducted foreign exchange intervention worth around 6.3 tril-
lion yen in October (October 31).
31) At the December Monetary Policy meeting, the Bank of Japan expanded the variation range of 10-year government
bond yields from ±0.25 percent to ±0.50 percent (December 20).
of an adjustment in the pace of monetary
20
tightening in major countries. Stock prices
dropped due to concerns over an economic
slowdown resulting from monetary policy
normalization in major economies, grow-
ing geopolitical risk in Ukraine, and China’s
COVID-19 lockdown measures. Meanwhile,
deposit-taking at banks saw growth contract
significantly, particularly in money market
deposit accounts. In terms of bank lending,
corporate loans increased substantially due
to growing corporate demand for working
capital stemming from a surge in raw material
prices, and a rise in bank lending as a result of
deteriorated conditions for the issuance of cor-
porate bonds, while household loans shifted
to a decline, owing to a rise in lending rates, a
slowdown in housing transactions, and tight-
ened lending regulations.
(1) Interest Rates
Sharp Increase in Long-Term and Short-Term

Interest Rates
In 2022, the 3-year Treasury bond yield ex-

hibited an uptrend owing to concerns over the
acceleration of monetary policy normalization
at the U.S. Federal Reserve and in major econ-
omies, in addition to rising global inflation.
From September onward, due to financial
market instability in the U.K.,32) as well as to
29) At the July Monetary Policy Committee meeting, the ECB raised the policy rate by 50 bp, and again at the Septem-
ber and October meetings by 75 bp.
30) The Ministry of Finance in Japan announced that it conducted foreign exchange intervention worth around 6.3 tril-
lion yen in October (October 31).
31) At the December Monetary Policy meeting, the Bank of Japan expanded the variation range of 10-year government
bond yields from ±0.25 percent to ±0.50 percent (December 20).
32) The U.K Cabinet, led by Prime Minister Liz Truss, announced a large-scale tax cut plan that included the abolition
of the top bracket of income tax and the withdrawal of a plan to raise corporate taxes (September 23). As the an-
nouncement triggered severe turmoil in U.K financial markets, such as a steep rise in government bond yields and
a plunge in the British pound, the aforementioned tax cut plan was withdrawn and Liz Truss resigned as prime min-
ister (October 20).
the domestic PF-ABCP market instability in
Figure Ⅰ- 22. Major Market Interest Rates 21
October, 33) the volatility of those bonds ex-
panded significantly and eventually recorded 3-year KTBs (left) 3-year AA- Corporate Bonds (left)
91-day CPs (left) 91-day MSBs (left)
its peak for the year. Since then, the yield on
Base Rate (left) Term Spread (right)1)
3-year Treasury bonds plummeted owing to (% per annum) (%p) (% per annum) (%p)
market stabilization measures taken by the 6.0 3.0 6.0 3.0
government and the Bank of Korea, 34)

expec- 5.0 5.0

tations of an adjustment in the pace of rising 2.0 2.0
4.0 4.0
interest rates in major economies, including
in the U.S., and the downward stabilization of 3.0 1.0 3.0 1.0
the USD/KRW exchange rate.

2.0 2.0
The 3-year corporate bond yield also rose 0.0 0.0
throughout the year. In 2022, the 3-year cor- 1.0 1.0
porate bond spread over the Treasury bond 0.0 -1.0 0.0 -1.0
13 16 19 22 22.1 7 12
yield 35) widened greatly, affected by the ex-
pansion of interest rate volatility, continued Note: 1) Yields difference between 3-year KTBs and the Base Rate.
Sources: Korea Financial Investment Association, Bank of Korea
geopolitical risk in Ukraine, the crowding-out
effects among credit bonds stemming from a
large-scale issuance of bank bonds and Korea
Electric Power Corporation (KEPCO) bonds,36)
as well as market instability after October,
and then narrowed slightly following market
stability measures.
Meanwhile, short-term market interest
33) As Gangwon-do applied for the corporate rehabilitation of the Gangwon Jungdo Development Corporation (GJC),
the PF-ABCP, which was issued by the special purpose company Iwon Jeil Cha based on loans taken out by the
GJC, was listed as being in default (October 4). As a result, credit risk aversion heightened, particularly in the CP
market, and subsequently market volatility spiked.
34) On October 23, the government announced the bond market stabilization fund (worth 20 trillion won), the corpo-
rate bond and CP purchasing program by policy financial institutions (worth 16 trillion won), liquidity support for
securities firms through securities finance corporations (worth 3 trillion won), guaranteed support for real estate PF
businesses (worth 15 trillion won), and the purchasing program for PFs backed by securities firms (worth 1.8 trillion
won). On October 27, the Bank of Korea announced the expansion of the range of eligible collateral for lending
facilities and eligible securities, a purchase of RPs for short-term financial market stabilization (worth 6 trillion won),
a purchase of RPs from institutions contributing to the bond market stabilization fund (worth 2.5 trillion won). For
detailed information on market stabilization measures by the Bank of Korea, see B. Financial Market Stabilization
Measures under Section 3, Chapter II.
35) The 3-year corporate bond spread over the Treasury bond yield (rated AA-) widened from 61 bp at the end of De-
cember 2021 to 81 bp at the end of June, to 109 bp at the end of September, to 179 bp at the end of November
2022, and then narrowed to 148bp at the end of December 2022.
36) In 2022, the net worth of issued credit bonds rated AAA, including Korea Electric Power Corporation (KEPCO)
bonds and bank bonds, was a total of 53.1 trillion won, accounting for 105 percent of the net issuance of overall
credit bonds, worth 50.6 trillion won. This had a crowding out effect on demand for other credit bonds with rela-
tively inferior credibility.
rates also soared in 2022. The yield on 91-day
22
Monetary Stabilization Bonds rose, reflecting
Base Rate hikes, and the yield on 91-day CPs
rated A1 increased steeply, influenced by the
PF-ABCP market instability, and then de-
clined slightly as of year-end 2022.
Interest rates on bank loans and deposits
(based on newly taken deposits) displayed a
sharp increase, reflecting a rise in market in-
terest rates.37)
(2) Stock Prices
Sharp Decline in KOSPI
In 2022, the Korea Composite Stock Price

Figure Ⅰ- 23. KOSPI and KOSDAQ Indexes
Index (KOSPI) plunged due to monetary poli-
cy normalization in major economies and con- KOSPI (left, 1980.1.4.=100) KOSDAQ (right, 1996.7.1.=1,000)
cerns over a slowdown in the global economy. 3500 1400 3200 1400
In chronological order, from the beginning of 3000 1300

3000 1200
the year, it continued to adjust, owing to con- 1200
2800
cerns over an economic slowdown stemming 2500 1000
1100
2600
from concerns over interest rate hikes by the 2000 800 1000
U.S. Federal Reserve, intensified geopolitical 2400
900
1500 600
risk in Ukraine, and COVID-19 lockdown 2200
800
measures in China. In July, it rebounded due 1000 400
2000 700
to the influx of low-priced stock purchases,
500 200 1800 600
but declined again in September because of 13 16 19 22 22.1 7 12
U.K. financial market anxiety, and eventually Source: KOSCOM
hit bottom for the year at 2,155 on September

30. Since then, although it shifted to a rise,
buoyed by expectations of an adjustment in
the pace of interest rate increases at the U.S.
Federal Reserve, it closed the year at 2,236,
down 24.9 percent compared to the end of
2021, due to the repeatedly heightened possi-
bility of an economic downturn resulting from
37) In December 2022, lending rates stood at 5.56 percent, up by 2.31 percentage points from 3.25 percent in Decem-
ber 2021. In terms of borrower types, corporate lending rates and household lending rates rose by 2.42 percentage
points and by 1.94 percentage points, respectively. Meanwhile, deposit rates were 4.22 percent, up by 2.52 per-
centage points from 1.70 percent in December 2021.
concerns over continued monetary policy
23
tightening in major countries and the deteri-
oration of economic indicators in the U.S. and
China.
T he KOSDAQ index ex hibited similar
trends to the KOSPI.

(3) Deposits and Loans at Financial Insti-
tutions
Decline in Margin of Deposit Growth at

Banks
In 2022, deposit-taking at banks was sig-

Table Ⅰ- 10. D
eposits at Financial Institutions
nificantly reduced compared to 2021. While (changes in deposits)
funds flowed from money market deposit (trillion won)
accounts to time deposits due to a steep rise 2018 2019 2020 2021 2022
in time deposit rates, overall deposit-taking at Deposits at Banks1) 91.6 106.3 188.4 198.5 107.4
Demand Deposits 10.9 65.9 189.3 131.0 -104.9
banks diminished owing to weaker incentives
Time & Savings
for banks to raise funds, stemming from a 72.2 48.3 -14.4 41.8 200.1
Deposits
slowdown in the growth margin of lending. Marketable
7.8 -14.6 14.6 33.9 13.6
Deposits of non-banking institutions, such Instruments2)
Deposits at Asset
as credit cooperatives, showed a rise, mainly Management 53.8 98.6 42.2 93.9 44.4
led by time deposits. Companies3)
Deposit-taking by asset management com- Deposits at Mutual
8.6 6.1 13.2 23.3 17.6
Savings Banks
panies saw its margin of growth narrowing
Deposits at Credit
39.7 60.7 50.1 69.4 86.0
due to outflows of funds from stock-type and Cooperatives4)
bond-type funds, affected by a drop in stock Notes: 1) Figures exclude deposits from banks, government, and non-
residents.
prices and interest rate hikes at home and
2) CDs, RPs, cover bills, and bank debentures.
abroad.38) 3) D
erivatives, real estate, indirect special-assets, mixed-asset
funds, and balanced funds.
4) Mutual credit companies, community credit cooperatives,
Household Lending Shifts to a Decline Amid and credit unions.
Sources: Bank of Korea, Korea Financial Investment Association
Steep Rise in Corporate Lending
In 2022, corporate loans saw their margin of

growth widen significantly, centered on large
corporate loans by banks.
Amid rising demand for working capi-
38) In 2022, in terms of deposit-taking by asset management companies for each fund type, bond-type funds and
stock-type funds witnessed outflows of 11.1 trillion won and 4.6 trillion won, respectively. On the other hand, MMF
and new funds marked inflows of 16.0 trillion won and 48.0 trillion won, respectively.
tal, driven by a surge in raw material prices,
Table Ⅰ- 11. Loans by Financial Institutions
24
large corporate loans exhibited a substantial (changes in amounts during the period)
increase, as demand for financing among (trillion won)
large corporations was concentrated on bank 2018 2019 2020 2021 2022
loans due to worsened conditions for issuing Corporate Loans 81.8 90.2 169.6 171.5 198.0
corporate bonds. Small and medium-sized Banks 46.7 47.7 110.8 94.1 114.9
enterprise (SME) loans also increased, cen- Large Corporations 6.9 -1.8 20.9 9.0 44.3
tered on loans for working capital on the back SMEs 39.8 49.4 90.0 85.1 70.6
Non-Banks1) 35.1 42.5 58.8 77.4 83.1
of continued financial support in the wake of
Household Loans 2)
76.8 58.3 128.7 123.5 -7.8
COVID-19.39)
Deposit Banks 52.4 54.6 82.2 60.2 -7.5
In the meantime, household loans by banks,
(Mortgage Loans) 30.1 39.7 49.9 45.7 14.6
including policy mortgage loans, shifted to a
(Other Loans) 22.4 14.9 32.2 14.6 -22.1
decline, affected by a contraction in demand
Non-Bank Depository
6.8 -4.5 7.6 27.6 -6.0
for lending due to lending rate rises and a Institutions3)
slowdown in housing transactions, as well Other Financial
17.5 8.1 39.0 35.7 5.7
Institutions4)
as the government’s tightening of household
Notes: 1) Based on loans by mutual credit companies, credit unions,
lending regulations.40) community credit cooperatives, mutual savings banks.
By lending type, mortgage loans saw their 2) Based on household credit statistics.
3) M
utual credit companies, credit unions, community credit
margin of growth narrow significantly, and cooperatives, mutual savings banks, trusts, and postal
other loans exhibited a substantial decline, savings.

4) Insurance companies, pension funds, specialized credit
centered on credit loans. financial companies, public financial institutions, etc.
Sources: Bank of Korea, Financial Supervisory Service
(4) Foreign Exchange Market
Expansion of Volatility in USD/KRW Ex-

change Rate
In 2022, the volatility of the USD/KRW ex-

change rate rose significantly due to continued
high inflation and to subsequent rapid interest
rate increases by the U.S. Federal Reserve.
From January to February, the USD/KRW
39) Loans provided by financial institutions in relation to COVID-19 financial support were originally scheduled to end
at the end of September 2022. Early this year, however, the government implemented additional financial support
measures by extending the maturity of the aforementioned loans by up to three years and by delaying their repay-
ment by up to one year (press release from the Financial Services Commission on September 27, 2022).
40) In accordance with the Household Debt Management Measures announced on April 29 and October 26, 2021, the
second phase of the individual borrower-level DSR has been applied since January 2022 to individual borrowers
with total loans exceeding 200 million won, and the third phase of the individual borrower-level DSR has been ap-
plied since July 2022 to individual borrowers with total loans exceeding 100 million won. Meanwhile, the regulation
that limited one’s credit limit on bank loans to be within one’s annual income, effective August 2021, was abolished
in July 2022.
exchange rate fluctuated around 1,200 won,
Figure Ⅰ- 24. E xchange Rate, Nominal Effective
25
and then surged to 1,440 won in October, af- Exchange Rate Index for Korea1)
fected by a contraction in investor sentiment
USD/KRW (left)
resulting from the Russia-Ukraine war and Nominal Effective Exchange Rate Index for Korea (right)
China’s prolonged COVID-19 lockdown mea- (won) (2020=100) (won) (2020=100)

1,600 140 1,500 130
sures, as well as the strengthening of the U.S.
dollar,41) which stemmed from the acceleration 120

1,400 120 1,400
of monetary policy tightening at the U.S. Fed-
eral Reserve in the wake of continued high 110
1,200 100 1,300

inflation. Later, following the stabilization of
100
high inflation, which had exceeded market
expectations, and implications by the U.S. 1,000 80 1,200
90
Federal Reserve regarding the possibility of
adjusting the pace of interest rate rises, the U.S. 800 60 1,100 80
13 16 19 22 22.1 7 12
dollar shifted downturn and the USD/KRW
Note: 1) The USD/KRW rate is the closing price on the Seoul
exchange rate also rapidly declined to the 1,260 Foreign Exchange Market and the Nominal Effective
won range. As of year-end 2022, the USD/ Exchange Rate Index for Korea is based on BIS
announcements.
KRW exchange rate stood at 1,264.5 won, a Sources: Bank of Korea, BIS
depreciation of 6.0 percent from the 1,188.8
won seen at year-end 2021. Figure Ⅰ- 25. USD/KRW Exchange Rate Volatility
Despite the strengthening of the U.S. dollar, (annual average)
the nominal effective exchange rate (NEER)
Intra-Day1) Day-to-Day 2)
index of the Korean won (BIS basis) increased (won) (won)
slightly, influenced by the weakening of the 10 10
Chinese yuan and Japanese yen resulting

8 8
from accommodative monetary policies in
China and Japan, both of which account for 6 6
a high proportion of trade with Korea. The
NEER recorded 98.23 as of year-end 2022, up 4 4
by 0.9 percent from 97.39 as of year-end 2021.

2 2
Meanwhile, in 2022, both intra-day and
day-to-day volatility in the USD/KRW ex-
0 0
change rate increased to an average of 8.4 and 2013 2016 2019 2022
6.5 won, respectively, compared to 5.2 and 3.6 Notes: 1) Average of the intra-day highest rate minus the intra-day
lowest rate.
won in 2021. 2) A
verage of the absolute value of the day closing rate
minus the previous day closing rate.
41) The U.S. Dollar Index (DXY), which measures the value of the U.S. dollar relative to six major currencies (the euro,
Japanese yen, British pound, Canadian dollar, Swedish krona, and Swiss franc), increased from an average of 96.9
in the first quarter to an average of 108.3 in the third quarter.
Sustaining Stability in the Foreign Currency
26 Figure Ⅰ- 26. Foreign Exchange Swap Rate
Money Market
Arbitrage Opportunities (3-month)1)
Foreign Exchange Swap Rate (3-month)
In 2022, while the USD/KRW exchange rate
KRW/USD Interest Rate Differential (3-month)
exhibited significant volatility along with a (%, %p) (%, %p)
surge in the U.S. dollar, the foreign exchange 4 4 4
market generally sustained its stable trend.

Arbitrage opportunities with a 3-month 2 2 2
maturity, which are defined as the KRW/USD

interest differential after subtracting the swap 0 0 0
rate,42) maintained a relatively stable level. In

addition, foreign borrowing conditions re- -2 -2 -2
mained stable with the margin of growth for
premiums on foreign borrowings by domestic
-4 -4 -4
banks restricted43) due to improved macropru- 13 16 19 22 22.1 7 12
dential stability. Note: 1) A rbitrage opportunities = KRW/USD interest rate

differential - swap rate.
Meanwhile, the foreign exchange swap Sources: Bank of Korea, Korea Money Brokerage Corp., Tullett
rate with a 3-month maturity dropped to Prebon Money Brokerage (Korea) Ltd
minus 1.70 percent in late November, due to

the widening of the inversion of the KRW/
USD interest rate differential in the wake of QR BOX
the U.S. Federal Reserve’s sharp hikes in its
policy rate, in addition to the impact of a con-
QR 1
traction in investor sentiment due to Russia’s
Monetary Policy
invasion of Ukraine and the economic slow-
Report Website
down in China. Entering December, however,
as the margin of the decrease narrowed due
to heightened expectations of an adjustment
in the pace of interest rate hikes by the U.S.
QR 2
Federal Reserve, the margin recorded minus
Regional Economic
1.15 percent as of year-end 2022, down by
Report Website
1.83 percentage points compared to the end of
2021.
42) A foreign exchange swap is a transaction through which two parties exchange different currencies at an agreed
exchange in the present time . They then re-exchange the principals after a set period at the forward exchange
rate that was determined when the relevant contract was concluded. The foreign exchange swap rate is expressed
as the annualized rate (%) of the difference between the forward and spot exchange rates as against the spot ex-
change rate: {(Forward exchange rate - Spot exchange rate) / Spot exchange rate}.
43) In March 2020, amid heightened concerns over the spread of COVID-19, the premiums on short-term foreign cur-
rency borrowings by domestic banks was at the 67 bp level, up 64 bp compared to the average of 2019. However,
in November 2022, it remained at a mere 19 bp, up by 17 bp compared to the average of 2021.
Ⅱ
Bank of Korea’s Conduct
of Business
1. Development and Implementation of Strategies 31
2. Monetary Policy 32
3. Financial Stability 40
4. Currency Issuance 52
5. Payment and Settlement Business 59
6. Foreign Exchange and International Cooperation 66
7. Research and Statistics 78
8. Treasury and Securities Business 90
9. External Communications 96
1. D evelopment and Imple- Table Ⅱ- 1. Summary of Medium-Term Strategies
mentation of Strategies in 2022 [2022~2024]
Medium-Term
Medium-Term Steps (18)
Objectives(6)
The Bank of Korea dedicates its utmost ①O

perate monetary policy efficiently
and strengthen analyses of policy
31
efforts to fulfilling its founding purpose of effects
securing price and financial stability, and to ② P romote financial and foreign
II. Bank of Korea’s Conduct of Its Business

1 P romote stable exchange market stability
promoting the stabilization and development growth through ③ S eek to ease financial imbalances
efficient
of the national economy as the nation’s central operation of ④ S trengthen policy communication,
bank. To this end, it annually develops and monetary policy and international exchanges and
cooperation
implements a set of strategies that define the
⑤ E xpand financial safety nets and
overall operational objectives and priorities for manage foreign reserves in a stable
manner
the Bank over the next three years. In accor-
① S trengthen research and studies on
dance with these strategies, all departments new financial and economic issues
establish and implement their own key busi- 2 S trengthen
competitiveness ② E stablish a system to conduct
ness plans. in research and research and studies so as to
1. Development and Implementation of Strategies

studies enhance research capacities
The medium-term strategies in 2022 con-
③ A dvance economic statistics services
sisted of six strategic objectives in major busi-
ness areas, and 18 related strategic plans. The 3 E nhance stability ① Improve surveillance and policy
and efficiency functions of payment and settlement
following sections outline the key tasks and of payment systems
achievements of these strategic plans in dif- and settlement ② E nsure innovation and development
systems of payment and settlement systems
ferent business areas.
① R einforce studies on expansion of
The medium-term strategies are grounded central bank mandates
in the longer-term, 10-year BOK Medium- ② Improve monetary policy framework
4 E xpand policy
and Long-term Development Strategy(BOK ③ S trengthen authority of financial
areas and
2030). The Bank established BOK 2030 in June increase policy stability mandate and develop policy
instruments tools
2020 to proactively address the rapidly-shift-
④D
evelop central bank policy
ing internal and external policy landscapes instruments in response to climate
change issues
and to meet growing public expectations for
① A ccelerate digital transformation in
the central bank. working environment and processes
5 P ursue digital
BOK 2030 sets its medium- to long-term vi- innovation ② E stablish system of digital
sion as “the Bank of Korea leading the stability governance
and development of the national economy.” To 6 Innovate ① S uccessfully carry out medium- to
administrative long-term measures concerning
this end, the Bank has established four stra- and personnel innovation in administrative and
management, personnel management
tegic goals, which are being implemented in and
phases: “Expansion of policy arena and pol- strengthen risk ② Manage risks preemptively and
management strengthen risk response capacities
icy instruments,” “Enhancement of research
quality,” “Active pursuit of digital transforma-
tion,” and “Phased restructuring of personnel
management system.”
2. Monetary Policy44) ensure that consumer price inflation would
reach the inflation target over the medi-
um-term. Consumer price inflation in 2022
The Bank of Korea devotes its utmost ef- recorded 5.1 percent, rising significantly over
forts to the sound development of the na- the inflation target, due to supply-side factors
32
tional economy by pursuing price stability such as rising international commodity pric-
and paying attention to financial stability, as es due to the Russia-Ukraine war, combined
well, through the efficient establishment and with demand-side factors in the wake of eased
implementation of monetary and credit poli- quarantine measures.
cies. The Bank has selected inflation targeting
as its operational framework for monetary
Figure Ⅱ- 1. Inflation Target and CPI Inflation
policy, and even under its inflation-targeting (year-on-year)
regime, policy decisions are made based upon
(%) (%)
a comprehensive consideration of issues, such 7 7
as economic growth and financial stability, in 6 6
addition to inflationary conditions. 5 5
In order to effectively achieve its policy 4 4

2.0%
objectives, the Bank of Korea determines the 3
(Inflation Target)
3
Base Rate and also utilizes other policy instru-
2 2
ments, including lending and deposit facilities,
1 1
open market operations, and the reserve re-
0 0
quirement system.
-1 -1
2016 2017 2018 2019 2020 2021 2022
A. Inflation Target Sources: Bank of Korea, Statistics Korea
Since 2016, the Bank of Korea has set an in- B. Base Rate
flation target of 2 percent, based on the year-
on-year rate of increase in the consumer price In 2022, the Bank of Korea raised the Base
index (CPI). The Bank implemented the “In- Rate on seven occasions from 1.00 percent to
flation Target for 2019 Onwards” starting in 3.25 percent in response to persistently high
2019, which was changed to operate in a way inflation.45)
that no longer specifies a period for its appli- In chronological order, the Bank raised the
cation, while maintaining the inflation target Base Rate by a total of 0.75 percentage points
at 2 percent, the same as in recent years (from from 1.00 percent to 1.75 percent across three
2016 to 2018). occasions during the first half of the year, as
The Bank operated its monetary policy to inflation exceeded the inflation target amid
44) For further information on the monetary and credit policies implemented by the Bank of Korea, refer to II. Conduct
of Monetary Policy under the Monetary Policy Report issued quarterly. The paper’s URL can be found in footnote
1) on page 3, and its QR code on page 26. For further information on the monetary policy system of the Bank of
Korea, refer to the Monetary Policy in Korea (2017) published by the Bank of Korea.
45) F
or detailed information, see 2. Minutes of the Monetary Policy Board Meeting in the Appendix.
the ongoing economic recovery. A detailed also rose to the 4 percent range, fueling con-
examination of the domestic economy reveals cerns about entrenched inflation. In terms of
that growth continued to recover, driven by a financial stability, a decline in household debt
surge in consumption, particularly in face-to- and housing prices mitigated the risk of fi-
face services, although export growth dimin- nancial imbalances, while volatility increased
33
ished due to worsening external conditions. In significantly in the foreign exchange sector.
terms of inflation, the upward pressure from A robust U.S. dollar, combined with a weak

the supply side intensified due to global sup- yen and yuan, and a continuing trade deficit,
ply disruptions and the Russia-Ukraine war. drove the won/dollar exchange rate to the
Consequently, consumer price inflation surged mid-1,400 won level, sparking concerns about
from the 3 percent range at the beginning of inflationary pressures and increased outflows
the year to the 4 percent range in March and of foreign investment funds. Considering
the 5 percent range in May. These elevated these concerns about persistent inflation and
inflation rates were anticipated to persist into increased risks in the foreign exchange sector,
the second half of the year. In terms of finan- the Bank deemed it appropriate to raise the
cial stability, accumulated risks of financial Base Rate to a contractionary level.
2. Monetary Policy
imbalances subsided, as growth in household As such, the Bank of Korea raised the Base
loans and housing prices decelerated. Consid- Rate from 1.00 percent to 3.25 percent in 2022.
ering these economic and price developments, This adjustment appears to have effectively
as well as the need to fundamentally reduce permeated the financial market, mitigating
financial imbalance risks, the Bank deter- the accumulated risks associated with house-
mined that it was appropriate to decrease the hold debt and housing price imbalances, while
extent of monetary policy accommodation. also having a significant impact on reducing
In the second half of the year, the Bank foreign exchange risks. In terms of inflation,
raised the Base Rate by 1.50 percentage points, the Bank has been recognized for its role in
from 1.75 percent to 3.25 percent, as infla- stabilizing long-term expected inflation near
tion remained elevated despite weakening the inflation target by curbing further esca-
growth. Although consumption continued to lation of inflationary pressures. Consumer
recover, the domestic economy experienced a prices began to decelerate with a time lag in
slowdown in growth due to the impact of the the second half of 2022, and the impact of the
global growth deceleration on export growth. Base Rate adjustment is anticipated to become
This slowdown was projected to extend into more pronounced in 2023.
2023. Regarding prices, inflation intensified
compared to the first half of the year, as both
demand- and supply-side pressures escalated.
In July, consumer price inflation reached 6.3
percent (year-on-year), the highest level since
the financial crisis (November 1998), and per-
sisted in the 5 to 6 percent range even after
August. The core inflation rate (excluding food
and energy) and short-term expected inflation
term deposits in MSAs in accordance with
Figure Ⅱ- 2. B
ank of Korea Base Rate
short-term financial market conditions, such
(% per annum) (% per annum) as fluctuations in the supply and demand of
4 4
reserves.
(Nov. 24)
(Oct. 12) On an average outstanding balance basis,
34 3
(Aug. 25)
3 the scale of MSB issuance decreased by 23.5
trillion won year-on-year due to a decline in
(Jul. 18, 2019)
2
(Oct. 16)
2 the scale of liquidity adjustment required and
(Mar. 17, 2020) (Jul. 13) withering confidence in bond investments.
(May 26)
1 (May 28)
(Apr. 14) 1 Meanwhile, net reverse repos (reverse repos
(Jan. 14, 2022)
(Nov. 25)
minus repos, on an average outstanding bal-
0
(Aug. 26, 2021)
0 ance basis) increased by 5.6 trillion won year-
2019 2020 2021 2022
on-year. This growth in net reverse repos
resulted from the increase in reverse repos
accompanying the cut in MSB issuance. MSA
C. Open Market Operations deposits (on an average outstanding balance
basis) increased by 1.2 trillion won compared
The Bank of Korea flexibly adjusted liquid- to the previous year.
ity to maintain the call rate at the level of the
Base Rate set by the Monetary Policy Board
Table Ⅱ- 2. S
cale of Liquidity Adjustment via Open
through the application of measures such as Market Operations (average basis)
Monetary Stabilization Bonds (MSBs), Repur- (trillion won)
chase Agreements (RPs), and Monetary Stabi- 2022

2021
lization Account (MSA). Year Ⅰ Ⅱ Ⅲ Ⅳ
Scale of Liquidity
In 2022, the scale of liquidity adjustment Adjustment Required
177.4 160.6 166.0 169.4 161.8 145.4
required46) on an average outstanding balance MSBs 150.6 127.1 139.7 130.3 122.2 116.4
basis was 160.6 trillion won, decreasing by Repos Net
17.5 23.0 19.3 27.6 26.3 18.9
16.8 trillion won compared to the previous Outstanding
Reverse Repos 17.5 23.6 19.4 27.6 26.3 20.8
year. This decline was attributable mainly to
Repos 0.0 0.5 0.1 0.0 0.0 2.0
an increase in reserves demand caused by the
MSA 9.3 10.5 7.1 11.5 13.3 10.1
growth in transferable deposits, in addition to
a decline in the supply of reserves as curren-
cy issuance expanded. In response, the Bank
scaled down its MSB issuance and flexibly As a result, among all of the Bank’s open
adjusted the volume of RP transactions and market operation instruments, MSBs account-
46) The scale of liquidity adjustment required is defined as the difference between the supply of reserves, which is the
balance that banks actually hold in their central bank accounts, and the demand for reserves, which is the legal-
ly-required reserves that banks are obliged to hold. If the supply of reserves, the amount of reserves that banks
hold in their central bank accounts, decreases due to an increase in the public circulation of cash (currency issued),
or if the demand for reserves, the amount of reserves that banks are required to hold, increases due to an increase
in deposits received, the scale of the liquidity adjustment required decreases.
ed for 79.1 percent in 2022, down from 84.9 of its role as a central bank responsible for
percent in 2021, while net reverse repos and monetary and credit policies. The Bank’s cred-
the MSA represented 14.3 percent and 6.5 per- it businesses in 2022 included the Bank Inter-
cent in 2022 respectively, up from 9.8 percent mediated Lending Support Facility, Liquidity
and 5.2 percent in 2021. Adjustment Loans, and Intra-day Overdrafts,
35
In addition, to enable more flexible open while its deposit businesses consisted of
market operations in response to market Current Account Deposits, Fund Adjustment

conditions, the Bank increased the volume of Deposits, and Monetary Stabilization Account
reverse repos by borrowing Treasury bonds Deposits.
amounting to 7 trillion won. Furthermore, As of the end of 2022, the balance of the
taking into account MSBs in circulation and Bank’s won-denominated loans to financial
financial market conditions, the Bank reduced institutions stood at 40,975 billion won, in-
the volume of MSB buybacks to 3.5 trillion creasing by 695.2 billion won compared to the
won in September and 3.0 trillion won in No- end of 2021.
vember, down from the 4.0 trillion won worth
of buybacks previously conducted through
2. Monetary Policy
Table Ⅱ- 3. Loans1) of Bank of Korea (as of year-
regular auction processes. end)
(hundred million won)
Outstanding
Figure Ⅱ- 3. Scale of Liquidity Adjustments via Change
Open Market Operations (average 2021 2022
basis) Bank Intermediated Lending
378,338 392,493 14,155
Support Facility
MSBs1) Net Reverse Repos MSA
Loans to Special Purpose
(trillion won) (trillion won) Vehicle for Purchasing
24,460 17,257 -7,203
220 220 Corporate Bonds and
14.0 Commercial Paper2)
11.8
17.4 16.4 13.0
180
13.8 8.7 180
Total 402,798 409,750 6,952
14.4 12.8 10.5 9.5 9.3
8.0 Notes: 1) Excluding loans to government.
17.5 10.5 2) L
imited company for corporate liquidity support
140 23.0 140 organization.
182.5 Source: Bank of Korea

176.7 170.2 171.5 168.1 163.1
150.6
100 127.1 100 At the end of 2022, the volume of the Bank’s
deposits held totaled 168,465.1 billion won,
60 60 8,906.1 billion won higher than at year-end
2015 2016 2017 2018 2019 2020 2021 2022
2021. Among the deposits, won-denominated
Note: 1) E xcluding negotiated transactions with Korea Finance
Corporation (3.48 trillion won, issued in 2014, redeemed in
deposits increased by 21,849.4 billion won,
2015) and the Korea Development Bank (3.45 trillion won, while deposits in foreign currencies decreased
Issued in 2015, redeemed in 2016).
by 12,943.3 billion won.
D. Lending and Deposit Facilities
The Bank of Korea offers lending and de-

posit services to financial institutions as part
lowing the end of social distancing measures,
Table Ⅱ- 4. Deposits with Bank of Korea (as of
year-end) as well as the need to address high inflation
through credit policies in addition to raising
Outstanding
Change the Base Rate.
2021 2022
However, it will continue to operate exist-
36 Won Deposits 911,343 1,129,837 218,494
ing loans until their maturity (up to one year)
Financial institutions 883,159 1,084,505 201,346
even after the end of the temporary financial
Non-Resident 1)
28,184 45,332 17,148
Foreign Currency support.
684,247 554,814 -129,433
Deposits In addition, starting from April 2022, the
Total 1,595,590 1,684,651 89,061 Bank discontinued the operation of some
Note:1)Won deposits of international organizations, including the IMF. regular support measures48) that had achieved
their objectives,49) reducing the total amount
Operation of the Bank-Intermediated of the Bank-Intermediated Lending Support
Lending Suppor t Facilit y to Suppor t Facility by 3.2 trillion won, including the
SMEs amount of the Program for Stabilization of
SME Lending.
The Bank of Korea operates the Bank-Inter- In March, September, and November 2022,
mediated Lending Support Facility as a means the Bank urgently allocated the ceiling re-
to supply funds to banks at a lower interest serves of the Bank-Intermediated Lending
rate than the Base Rate to encourage active Support Facility to regional branches to sup-
lending to small and medium-sized enterpris- port SMEs in areas particularly affected by
es (SMEs). The total amount of the Bank-In- natural disasters.
termediated Lending Support Facility, the Specifically, in March, 60 billion won from
amount for each program, and ceiling reserves the ceiling reserves was urgently allocated to
are adjusted by the Monetary Policy Board as the Gangneung and Pohang branches, with
necessary, taking into account the financial each branch receiving 30 billion won, as the
and economic conditions and the financial sit- branches had jurisdiction over areas affected
uation of SMEs. by wildfires on the east coast. In September
At the end of September 2022, the Bank and November, 70 billion won50) was allocated
terminated the temporary support measures to the Pohang branch, which oversees areas
for SMEs and small businesses affected by affected by Typhoon Hinnamnor, to support
COVID-19 47)
as scheduled, considering their SMEs affected by the typhoon.
resumption of normal business activities fol- Meanwhile, the Bank-Intermediated Sup-
47) The Support for Companies Affected by COVID-19 (launched in March 2020), the Support for Small Businesses
(launched in October 2020)
48) At present, the Support for Trade Financing, the Support for New Growth Engine Development and Job Creation,
the Stabilization of SME Lending, and the Support for Regional Enterprises are in operation as regular support
measures under the Bank Intermediated Lending Support Facility.
49) Applications for materials, parts, and equipment businesses within the Support for New Growth Engine Develop-
ment and Job Creation, and the operation of the stabilization component within the Stabilization of SME Lending
were closed on April 1, 2022.
50) After initially allocating 50 billion won in September 2022, the Bank increased the amount by 20 billion won in No-
vember 2022.
port Lending rate was raised by 0.25 per-
Figure Ⅱ- 4. Bank Intermediated Lending
centage points on six occasions in 202251) to Support Facility Ceiling and Interest
Rates1)
reflect Base Rate increases. However, lending
rates for the Support for Small Businesses Ceiling (left) Interest Rate (right)
and the Support for Companies Affected by (trillion won) (% per annum)
45 3 37
COVID-19 were maintained at 0.25 percent
40
per annum.

35
As of the end of 2022, the total amount of
30 2
the Bank Intermediated Lending Support Fa- 25
cility stood at 39.8 trillion won, including 1.5 20
trillion won under the Support for Trade Fi- 15 1
nancing, 13.0 trillion won under the Support 10
for New Growth Engine Development and Job 5
Creation, 0.3 trillion won under the Stabiliza- 0 0

13 14 15 16 17 18 19 20 21 22
tion of SME Lending, 5.9 trillion won under
Note: 1) T he shaded area represents the upper and lower bounds for
the Support Program for Regional Enterprises,
2. Monetary Policy
the period when the lending rate varied for each program.
and 19.1 trillion won for ceiling reserves. Source: Bank of Korea
E. Monetary Policy Communication

Table Ⅱ- 5. Adjustment of Bank Intermediated
Lending Support Facility Ceiling
(trillion won, % per annum) The Bank of Korea continued its efforts to
Before After1) enhance communication with market partici-
Program Interest Interest
Ceiling Ceiling pants and the public to help economic players
Rate Rate
Support for Trade further understand its monetary policy oper-
1.5) 0.25 1.5 1.75
Financing
Support for New Growth ations and to enable them to form reasonable
Engine Development and 13.0 0.25 13.0 1.75 expectations about its policy direction amid
Job Creation
Stabilization of SME rapidly-changing internal and external policy
3.5 0.25 0.32) 1.75
Lending contexts, including the outbreak of the Rus-
Support for Regional
5.9 0.25 5.9 1.75 sia-Ukraine war, surging global inflation, and
Enterprises
Support for steep policy rate hikes by major economies.
Companies
Affected by
13.0) 0.25 13.0 0.25 First, as the Bank decided to review the
Limited COVID-19 status of inflation target operations twice per
Reserva-
Support for year starting in 2019, the Governor of the
tion
Small 6.0) 0.25 6.0 0.25
Businesses Bank of Korea attended a press conference in
Other 0.1 0.25 0.1 1.75 June and December and provided explana-
Total 43.0 - 39.8 - tions of inflationary conditions, future fore-
Notes: 1) As of end-2022. casts and risk factors, and the Bank’s policy
2) Effective April 1, 2022.
direction. The Monetary Policy Report issued
quarterly provided detailed explanations of its
51) In January 2023, the Bank also raised the Bank-Intermediated Support Lending rate by 0.25 percentage points,
from 1.75 percent to 2.00 percent per annum.
monetary policy operations. communication by delivering lectures at the
The Bank strengthened its domestic and Bank of Korea Friday Lecture for the public53)
international policy communication including and participating as speakers or discussion
its statements of resolution on the monetary panelists in international conferences orga-
policy direction and the press conference for nized by the Bank of Korea,54) as well as finan-
38
monetary policy decision meetings. The state- cial economic forums and seminars organized
ment of resolution also incorporated a new by the Korean Economic Association, Korea
section explicitly explaining the background of Money & Finance Association, Korea Institute
policy decisions and further elaborated upon of Finance, and Korea Capital Market Insti-
financial and economic conditions at home tute.
and abroad. Through the press conference, the They also engaged in various activities over-
Bank strived to enhance the transparency of seas, including meetings with central bank
policy operations by presenting the individ- executives of major countries and members
ual opinions of some Monetary Policy Board of the international financial community to
members on future policy directions. Addi- discuss the direction of monetary policy and
tionally, starting in July 2022, the Bank began global financial and economic conditions.
publishing the opening remarks to the press Moreover, they visited major industrial
conference in English to strengthen external facilities such as Kia’s production plants to
policy communication.52) exchange views with business representatives
The Bank managed its panel for external on issues related to the local economy, the
communications, consisting of around 200 business conditions of key industries, and
outside experts, to reinforce feedback from competitiveness. They also conducted various
its policy and administrative operations, and communication activities, such as meetings
strove to secure its diversity by including and interviews with economic experts and
scholars, researchers, financial experts, busi- media organizations.
ness and industry experts, and others on the
panel. The external opinions regarding mone-
tary policy decisions major reports, and policy
and administrative operations were collected
in a timely manner by the expanded and di-
versified communication panel and were then
reflected in the establishment of policy and
administrative improvements.
The members of the Monetary Policy Board
dedicated great efforts to monetary policy
52) The remarks are posted on the Bank of Korea's English-language website, along with the statement of resolution.
53) On July 27, Monetary Policy Board member Suh Young Kyung delivered a lecture titled Background to Changes in
Monetary Policy Stance and Risk Factors, and on November 11, board member Park Ki Young presented a lecture
titled Expected Inflation and Central Bank Communication.
54) These include the BOK International Conference, held from June 2 to 3, and the BOK-Korean Economic Associa-
tion International Conference, held on November 11.
QR BOX
QR 1 QR 2
Monetary Policy Report Monetary Policy in Korea 39
Website (2017)

QR 3 QR 4
Monetary Policy Suh Young Kyung,
Decisions and Opening 「Background to Changes
Remarks to the Press in Monetary Policy
Conference in English Stance and Risk Factors」
2. Monetary Policy
QR 5
Park Ki Young, 「Expected
Inflation and Central Bank
Communication」
3. Financial Stability55) research on new risks arising from medium-
to-long-term environmental changes in the
financial system, such as climate change and
A. Analysis and Assessment of Macro- crypto-assets.
prudential Stability
40 Evaluation of Financial Stability Conditions56)
The Bank of Korea dedicated itself to en-
suring the faithful fulfillment of its duties In general, the Korean financial system
related to financial stability, such as the com- exhibited stable trends, bolstered by the good
prehensive assessment of financial stability loss-absorption capacity of financial institu-
conditions in Korea and the suggestion of tions despite internal and external uncertain-
policy measures. By evaluating household and ties such as high inflationary pressures and
corporate debt, real estate market conditions, the tightening of monetary policies in major
and the soundness of financial institutions, countries. The risk of financial imbalances
the Bank issued early warnings for potential that had accumulated rapidly after COVID-19
risks to financial stability and collaborated was also reduced, as the growth of household
with related organizations to develop counter- debt slowed due to Base Rate increases. How-
measures. In particular, the Bank conducted ever, during the process of raising the Base
in-depth examinations of the effects on the fi- Rate, concerns emerged regarding the poten-
nancial system from changes in financial and tial failure of vulnerable sectors and credit and
economic conditions, including rapid mone- liquidity risks for some non-banking financial
tary policy tightening in major economies. In institutions, resulting from local disruptions in
addition, the Bank closely monitored changes short-term financial markets and adjustments
in debt repayment burden by sector with a in asset prices. Although the Financial Stress
focus on households and companies that are Index (FSI), 57) which indicates short-term fi-
vulnerable to internal and external shocks, nancial system instability, exceeded the crisis
while considerably enhancing its oversight of stage threshold (22.0), it eventually stabilized
the management soundness and resilience of following market stabilization measures im-
financial institutions through joint inspec- plemented by the government and the Bank
tions. Furthermore, the Bank continued its of Korea. Meanwhile, the Financial Vulnera-
55) A detailed explanation of financial stability conditions in 2022 can be found in the Financial Stability Report
(Half-Yearly) published by the Bank of Korea. June 2022 issue and December 2022 issue.
56) The Bank has been holding its Financial Stability Meeting on a quarterly basis since 2017 in order for the Monetary
Policy Board to evaluate financial stability conditions. In a bid to enhance communications related to its Financial
Stability Meetings, the Bank distributes a press release and holds a press conference on the day of the meeting.
Following the June and December meetings, the Bank submits a Financial Stability Report to the National Assem-
bly on the day of its deliberation and approval, as per Article 96 (1) of the Bank of Korea Act.
57) T he index refers to a composite index (0-100) calculated by standardizing 20 monthly indicators of six financial
and real economy sectors (banks, financial markets, external economic conditions, the real economy, households,
and corporations) that demonstrate financial conditions. It classifies financial conditions into three stages: normal,
warning, or crisis. The “warning” and “crisis” stage thresholds are set at 8 and 22, respectively, using the “noise-to-
signal ratio” method.
bility Index (FVI), 58) which reflects potential age, reached an estimated 225.1 percent at
vulnerability in the financial system from me- the end of 2022, increasing by 5.7 percentage
dium- to long-term perspectives, displayed a points compared to the same period in the
downward trend in line with the reduction of previous year. Although the growth rate of
financial imbalances that had been accumu- private credit significantly decelerated, mainly
41
lating. centered on household credit on the back of
Base Rate hikes and more stringent restric-

tions on loans, it still exhibited an upward
Figure Ⅱ- 5. Financial Stress Index (FSI) and
Financial Vulnerability Index (FVI) trend surpassing the rate of nominal GDP
growth.60)
Financial Stress Index (FSI)
70 70
T he overall debt-ser v icing burden on
60 60 households experienced a slight alleviation in
50 50
40 40 terms of household income, as the growth rate
30 30
Crisis Stage (22) of household debt fell below the growth rate
20 20
Warning Stage (8)
10 10 of household income. The burden is also esti-
0 0
mated to have decreased in relation to house-
3. Financial Stability
07 09 11 13 15 17 19 21 22.12
Financial Vulnerability Index (FVI) hold assets, as the growth rate of household
80 80
debt slowed further than that of household
60 60 assets recently. Meanwhile, the soundness of
40 40 household debt remained solid as the loan de-
20 20 linquency rate of households stayed low.61)
0 0
07 09 11 13 15 17 19 21 22.4/4
The private credit59)-to-nominal GDP ratio,

an indicator of the level of private sector lever-
58) This refers to a composite index (0-100) calculated by standardizing 39 indicators related to the degree of financial
imbalances, such as asset prices and credit accumulation, and financial institutions’ resilience (record low and high
set to 0 and 100, respectively, using the min-max method). This index determines financial stability situations from
medium- to long-term perspectives by measuring the vulnerability of the financial system to shocks. Its increase
(or decrease) indicates a situation where the extent of adverse effects on financial and economic conditions in the
event of internal and external shocks can widen (or narrow) as the structural vulnerability of the financial system is
heightened (or mitigated) due to heightened (or mitigated) financial imbalances and weakened (or strengthened)
resilience of financial institutions.
59) The BCBS (2010) broadly defines private credit as “all types of debt funds provided to households and non-finan-
cial corporations.” In accordance with this definition, the Bank used the sum of household debt (private and gov-
ernment loans) and corporate debt (private and government loans, securities other than shares) as reported in the
flow-of-funds statistics.
60) In 2022, the growth rate of private credit was 6.5 percent, while the rate of nominal GDP growth (provisional) was 3.8
percent.
61) However, the loan delinquency rate of households at financial institutions (banks and non-bank financial institutions)
rose slightly from 0.52 percent at the end of the fourth quarter of 2021 to 0.60 percent at the end of the third quar-
ter of 2022.
Figure Ⅱ- 6. H
ousehold Credit1) Figure Ⅱ- 7. C
orporate Credit1) and Financial
Soundness2)
Balance (left) Rate of Increase (right)2)
Rate of Total Corporate Debt Ratio4) (left)
(trillion won) (%)
Loan Increases3)(left) Interest Coverage Ratio 6)
2,000 16 Net Issuance of Corporate (right)
Loans 5) (right)
42 1,500 12
(%) (trillion won) (%) (times)
1,000 8 20 40 120 10
500 4
15 30 100 8
0 0
07 10 13 16 19 22.4/4
Household Debt-to-Disposable Income Ratio (left)3) 10 20 80 6

Financial Liabilities-to-Financial Assets Ratio (right)4)
(%) (%) 5 10 60 4
180 60
160 55 0 0 40 2
140 50
-5 -10 20 0
120 45 11 15 20.1/4 22.4/4 11 13 15 17 19 21 227)
100 40 Notes: 1) Based on loans to corporations (excluding financial and

07 10 13 16 19 22.4/4
insurance companies) by deposit-taking banks (commercial
Notes: 1) Household credit statistics basis. banks, specialized banks, and foreign bank branches).
2) Year-on-year basis. 2) B
ased on a total of 2,392 companies, including listed and
3) Estimated figure for each quarter. unlisted companies, that submitted business reports.
4) Based on the flow of funds statistics. 3) Year-on-year basis.
Source: Bank of Korea 4) Debt/equity, end-period basis.
5) Yearly basis (before 2020), Quarterly basis (since 2020).
6) Operating income / Interest expenses.
Corporate credit continued to display a high 7) Based on Q3 each year.
Sources: Financial institution business reports, KIS-Value
growth rate despite interest rate hikes, fueled
by increased demand for facilities and work-
ing capital due to rising exchange rates and Commercial banks experienced significant
commodity prices. The overall debt-servicing asset growth and maintained healthy prof-
capacity of companies deteriorated as total itability, driven by an increase in corporate
interest expenses surged in line with rising loans and an influx of market funds into de-
market interest rates. posits. In contrast, non-bank financial institu-
tions saw weaker growth and profitability due
to declining asset prices and capital outflow
into the banking sector. However, financial
institutions, including both banks and non-
bank financial institutions, maintained rela-
tively favorable asset soundness, supported by
government policies.
Figure Ⅱ- 8. Commercial Bank Asset Quality and Figure Ⅱ- 9. F
inancial Institutions1) Capital
Profitability Adequacy Ratios2)3)
Return on Assets1) Substandard-or-Below Loan Ratio2) 21.4/4 22.1/4 22.2/4

Net Interest Margin1) 22.3/4 22.4/4
(%) (%) (%) (%)
2.5 2.5 25 800 43

2.0 2.0 20 640
1.5 1.5 15 480
1.0 1.0 10 320
0.5 0.5 5 160
0.0 0.0 0 0
13.1/4 15.1/4 17.1/4 19.1/4 21.1/4 22.4/4 Banks (left) Mutual Credit- Mutual Life Securities
Credit Specialized Savings Insurance Cos. (right)
Notes: 1) Accumulated quarterly incomes annualized. Cooperatives Financial Banks (left) Cos. (right)
(left) Cos. (left)
2) End-period basis.
Sources: Financial institution business reports Notes: 1) “Banks” refers to commercial banks.
2) T
otal capital ratio of banks (10.5% for supervisory
Resilience generally remained solid as an
standard, 11.5% for D-SIBs), net capital ratio of mutual
indicator of the financial system’s capacity to credit cooperatives (2%; 4% for MG community credit
cooperatives; 5% for Nonghyup), adjusted capital ratio of
withstand domestic and external shocks. Specif-
credit-specialized financial companies (7%; 8% for credit
ically, capital ratios at commercial banks, which card companies), BIS capital ratio of mutual savings banks
(7%; 8% for banks with total assets of 1 trillion won or more),
indicate the ability to absorb losses, along with
risk-based capital ratio of insurance companies (100%), and
liquidity coverage ratios, which represent the ca- net capital ratio of securities companies (100%).
3) Dotted lines show supervisory standards.
pacity to respond to capital outflows, significant-
Sources: Business reports from financial institutions
ly surpassed regulatory standards for all banks.
Non-bank financial institutions also displayed a
Figure Ⅱ- 10. E xternal Debt-to-Nominal GDP
positive trend, with capital ratios at most institu- Ratio1) and Short-Term External Debt-
to-Official Foreign Reserves Ratio1)
tions satisfying regulatory standards. However,
liquidity risks relatively increased for securities Net External Assets (left) Short-Term External Debt (left)
E
xternal Debt / Nominal Short-Term External Debt /
firms and financial companies specializing
GDP (right) Official Foreign Reserves (right)
in loan businesses, which rely on marketable (100 million dollars) (%) (100 million dollars) (%)
financial instruments, due to concerns about 6,000 50 3,000 100
capital outflows to the banking sector and insol-

vencies of real estate project finances. 4,500 40 2,250 80
Meanwhile, Korea’s external payment ca-

pacity generally maintained a favorable trend, 3,000 30 1,500 60
although it declined slightly due to a decrease

in foreign exchange reserves as a result of 1,500 20 750 40
measures to ease volatility in the foreign ex-
change market and a decrease in net foreign
0 10 0 20
assets in debt instruments as other financial 07.1/4 12.1/4 17.1/4 22.4/4 07.1/4 12.1/4 17.1/4 22.4/4
institutions reduced their investment in for- Note: 1) End-quarter basis.

eign currency securities.
The Bank plans to further strengthen its ef- banks’ management of household and cor-
forts to proactively identify financial stability porate loans, potential insolvencies, and risk
risk factors arising from internal and external management practices. In particular, it ana-
uncertainties, such as high inflationary pres- lyzed the possibility of vulnerable borrowers,
sures at home and abroad, the continuation of such as self-employed individuals and small
44
interest rate hikes in major economies, and the business owners, becoming insolvent due to
expansion of volatility in financial and foreign ongoing policy interest rate hikes at home
exchange markets. In particular, the Bank will and abroad, asset price adjustments, and the
closely examine the impact of Base Rate hikes normalization of flexible financial regulato-
on financial stability by sector and collaborate ry measures in response to COVID-19 amid
with relevant institutions to devise proactive deepening financial imbalances.
policy responses aimed at preventing risk In addition to thematic examinations, the
factors from materializing, specifically those Bank conducted comprehensive risk examina-
associated with economic entities vulnerable tions of each individual bank to examine its
to internal and external shocks. Additionally, business conditions, loan-handling practices
the Bank will continue to monitor the sound- and risk factors, and compliance with Bank
ness and liquidity conditions of certain non- of Korea regulations. Furthermore, it actively
bank financial institutions that are susceptible conducted regular monitoring activities on
to short-term financial market turbulence, financial institutions' management conditions
despite their recent turn toward stabilization, and risk factors, while expanding its microda-
with a particular focus on the possibility of ta database on corporate loans and improving
insolvency connected to asset markets such as analysis systems for effective regular moni-
real estate PFs. toring activities. The Bank also provided the
results of joint examinations of financial insti-
Implementation of Joint Examinations and tutions to government agencies, including the
Discussions of Domestic and International Financial Supervisory Service, for policy refer-
Financial Stability ence and continued to strengthen feedback on
its examination activities by holding examina-
The Bank of Korea conducted joint exam- tion results briefings with the attendance of
inations of financial institutions with an em- financial institutions.
phasis on the early detection of possible risk
materialization stemming from changes in
Table Ⅱ- 6. Bank of Korea’s On-Site Joint
monetary policies and the regulatory environ- Examination
(number)
ment at home and abroad, while significantly
2018 2019 2020 2021 2022
strengthening its monitoring of vulnerable
Thematic
sectors and coordination with relevant institu- 3 4 - 2 3
Examination
tions. General
2 2 2 4 2
Examination
First, the Bank carried out thematic exam-
inations three times a year, in which multiple
banks are simultaneously assessed on spe- Moreover, the Bank of Korea continued to
cific themes with the aim to examine major exchange information on major issues and co-
ordinate policies by participating in a variety changed views on supervisory trends among
of consultative bodies on financial stability member countries and sought cooperation to
at home and abroad. For example, the Bank effectively respond to the changing financial
joined the Macroeconomic Finance Meeting 62)
and economic environment after COVID-19,
among domestic relevant agencies to build including the digitalization of finance. Fur-
45
consensus on the understanding of financial thermore, the Bank attended the Meeting of
stability conditions and explore response mea- Directors of Supervision of the South East

sures alongside the government and super- Asian Central Banks (SEACEN) as a member
visory authorities. In particular, when short- institution of the Working Group on Banking
term financial market conditions deteriorated Supervision and Supervisory Colleges 63) or-
rapidly after October including the spread of ganized by foreign supervisory authorities in
credit risk aversion on PF-ABCPs and securi- major countries to share information on glob-
ties firms’ CPs, the government and the Bank al financial supervision issues and maintain
of Korea responded swiftly by announcing policy coordination.
market stabilization measures. The Bank also
strengthened its monitoring of risk factors B. Financial Market Stabilization Mea-
at home and abroad by regularly convening sures
these consultative bodies.
Internationally, the Bank actively participat- Responding to Increased Bond Market Vola-
ed in discussions with international financial tility Amid Widespread Global Inflation
organizations to assess global financial sta-
bility situations and establish global financial In 2022, due to widespread global inflation
regulations. It collaborated on the regular and accelerated monetary policy normal-
assessment of vulnerabilities in the global ization by central banks in major countries,
financial system by the Financial Stability Treasury bond interest rates rose rapidly in the
Board (FSB), and the analysis of potential bond market, and market interest rate volatili-
risks related to non-bank financial interme- ty increased significantly.
diation (NBFI) and crypto assets. The Bank Accordingly, the Bank of Korea conducted
also participated in conferences under the outright purchases of Treasury bonds on three
Basel Committee on Banking Supervision occasions with a total amounting to 7.0 trillion
(BCBS) to complete an assessment report on won, including 2.0 trillion won on February 7,
the implementation of the Basel III regulatory 2.0 trillion won on April 5, and 3.0 trillion won
reforms and develop a regulatory proposal to on September 29, as a market stabilization
ensure soundness in relation to global banks' measure in response to heightened interest
exposure to crypto assets. Additionally, it ex- rate volatility.
62) This consultative body was created in July 2012 with membership comprised of deputies from a range of agencies,
including the Bank of Korea, the Ministry of Economy and Finance, the Financial Services Commission, and the
Financial Supervisory Service. Its regular and ad hoc meetings are chaired by the Vice Minister of Economy and
Finance.
63) This refers to a consultative vehicle for information sharing and supervisory cooperation in which supervisors from
international financial institutions in the home and host countries participate to effectively regulate and supervise
such institutions.
In addition, the Bank reduced the issuance outright transactions for a limited period from
of Monetary Stabilization Bonds (MSBs) in September 2022 to August 2025.
March, April, and September from the pre-
vious month’s plan by 1.3 trillion won, 2.2 Short-Term Financial Market Stabilization
trillion won, and 1.5 trillion won, respectively. Measures Following the PF-ABCP Default
46
It also announced a plan on June 13 to reduce
the amount of MSB issuance in June from the The Bank of Korea implemented short-term
original plan by 1.5 trillion won from 4.5 tril- financial market stabilization measures on
lion won to 3.0 trillion won from June 13 to 30. November 1 to stabilize the short-term money
market and the bond market, as credit risk
Measures for Smooth Provision of Relief aversion expanded primarily in the short-term
Conversion Loans financial market following the default of proj-
ect-financing asset-backed commercial papers
In August 2022, the Bank of Korea provided (PF-ABCPs) and the spread of its impact into
120 billion won to the Korea Housing Finance the bond market.
Corporation 64)
to support the smooth provi- First, the Bank temporarily allowed existing
sion of Relief Conversion Loans. The Bank’s Treasury bonds, MSBs, government-guaran-
funding is expected to contribute to financial teed bonds, MBSs issued by the Korea Hous-
stability by accelerating the improvement of ing Finance Corporation, debentures issued by
household loan structures amid rising interest specialized banks65), as well as general bank
rates. In particular, the proportion of adjust- debentures and bonds issued by nine public
able-rate mortgages is expected to decrease to organizations, to be included for three months
some extent, given the smooth supply of spe- in the Bank of Korea’s eligible collateral for
cial bogeumjari loans for loan transfers until lending facilities, collateral securities for guar-
the end of 2023. anteeing net settlements, and securities eligi-
Moreover, to minimize the possibility of ble for RP transactions in the open market.66)
volatility in the bond market following the im- The amount of additional high-quality liquid
plementation of Relief Conversion Loans and assets that domestic banks can utilize through
the expanded issuance of MBSs, the Bank de- this measure is estimated to be up to 29 tril-
cided on July 28 to include MBSs issued by the lion won (as of the end of September 2022).67)
Korea Housing Finance Corporation, which Furthermore, the Bank implemented a three-
was previously limited to securities eligible month deferral for raising the collateral-to-net
for RP transactions, as securities eligible for debit cap ratio as a means of guaranteeing
64) The Bank of Korea has invested a total of 645 billion won in the Korea Housing Finance Corporation, including 310
billion won in 2004 to support the establishment of the corporation, 135 billion won in 2012 to promote the handling
of fixed-rate household loans, and 200 billion won in 2015 to support the provision of the first Relief Conversion
Loan program.
65) This measure added debentures issued by specialized banks, which were not eligible for RP transactions in the
open market by a central bank, to the list of eligible securities.
66) On January 13, 2023, the Monetary Policy Board voted to extend the end date of the short-term financial market
stabilization measures by three months from the end of January to the end of April.
net settlements from 70 percent to 80 percent,
which was scheduled in February 2023.68)
The Bank also announced on October 27
that it would temporarily purchase RPs from
November 2022 to January 2023 as needed
47
from institutions eligible for the Bank of Ko-
rea’s RP transactions, including securities

firms and securities finance corporations, in
order to facilitate smooth fund flows in the
short-term financial market and alleviate tem-
porary liquidity contractions. Subsequently,
the Bank conducted RP purchases totaling
12.13 trillion won on five occasions from No-
vember to December 2022.
In addition, in preemptive response to
growing concerns about financing among
financial institutions and companies with the
year-end approaching and a potential credit
crunch in the short-term financial market,
the Bank announced a plan on November 28
to support the provision of liquidity up to 2.5
trillion won through RP purchases within 50
percent of each individual institution's sub-
scription to the Bond Market Stabilization
Fund. In line with this, on December 16, the
Bank conducted RP purchases totaling 61.6
billion won for the aforementioned institu-
tions.
67) Domestic banks were expected to ease the compliance burden of the regulatory liquidity ratio and manage addi-
tional margin payments for OTC foreign exchange derivative transactions utilizing high-quality liquid assets, includ-
ing Treasury bonds and MSBs, which would be secured by providing collateral, such as general bank debentures,
to the Bank of Korea.
68) On January 13, 2023, the Monetary Policy Board voted to defer the increase in the collateral-to-net debit cap ratio
to guarantee net settlements for an additional three months to August 2023. For detailed information on the time-
line for raising the collateral-to-net debit cap ratio, see B. Oversight and Risk Management under Section 5, Chap-
ter II.
Table Ⅱ- 7. F
inancial Market Stabilization Measures in 2022 (Summary)
Type Time Content
Responding to
■ O utright purchases of Treasury In February, April, and
- Outright purchases of Treasury bonds totaling 7 trillion won
Increased Bond bonds September
Market Volatility - Reduction of issuance in March, April, and September from the previous month’s plan
48 ■ R eduction of the scale of MSB In March, April, June,
Amid Widespread by 1.3 trillion won, 2.2 trillion won, and 1.5 trillion won, respectively
Global Inflation issuance and September
- Reduction of issuance in June by 1.5 trillion won from the original plan
■ F unding for the Korea Housing Announced in July,
- 120 billion won to the Korea Housing Finance Corporation
Measures Finance Corporation implemented in August
for Smooth Announced in July,
Provision of Relief
■ E xpansion of securities eligible for
effective from - Inclusion of MBSs issued by the Korea Housing Finance Corporation (previously limited
Conversion Loans outright transactions in the open
September 2022 to to RP transactions) as securities eligible for outright transactions for a limited period
market
August 2025
- Before: Treasury bonds, MSBs, government-guaranteed bonds, credit securities, MBSs
issued by the Korea Housing Finance Corporation, debentures issued by specialized
Eligible collateral for banks.3)
lending securities - After: Treasury bonds, MSBs, government-guaranteed bonds, credit securities, MBSs
issued by the Korea Housing Finance Corporation, debentures issued by specialized
banks,3), general bank debentures,4), and bonds issued by nine public organizations.5)
Announced in October, - Before: Treasury bonds, MSBs, government-guaranteed bonds, MBSs issued by the
■ E xpansion
Collateral for effective from Korea Housing Finance Corporation, debentures issued by specialized banks.3)
of eligible
guaranteeing net November 2022 to - After: Treasury bonds, MSBs, government-guaranteed bonds, MBSs issued by the
securities1)
settlements January 20232) Korea Housing Finance Corporation, debentures issued by specialized banks,3), general
bank debentures,4), and bonds issued by nine public organizations.5)
Short-Term
Financial Market - Before: Treasury bonds, MSBs, government-guaranteed bonds, MBSs issued by the
Stabilization Eligible securities Korea Housing Finance Corporation.
Measures for RP transactions - After: Treasury bonds, MSBs, government-guaranteed bonds, MBSs issued by the
Following the PF- in the open market Korea Housing Finance Corporation, debentures issued by specialized banks,3), general
ABCP Default bank debentures,4), and bonds issued by nine public organizations.5)
■ D eferral of the increase in the
- Three-month deferral of the increase in the collateral-to-net debit cap ratio
collateral-to-net debit cap ratio to Announced in October
(70%→80%) to guarantee net settlements (February 1, 2023→May 1, 2023).6)
guarantee net settlements
Announced in October,
- RP purchases as needed from institutions, including securities firms and securities
implemented from
■ T emporary RP purchases finance corporations
November 2021 to
(RP purchases totaling 12.13 trillion won from November to December 2022).
January 2022
Announced
■ R P purchases from financial - Conducted RP purchases from financial institutions that have subscribed to the Bond
in November,
institutions that have subscribed to Market Stabilization Fund
implemented in
the Bond Market Stabilization Fund (Aa total of 61.6 billion won in December 2022).
December
Notes: 1) Underlines specify the newly included securities.
2) In January 2023, the measure was extended for an additional three months (January 31, 2023 → April 30, 2023).
3) Debentures issued by the Industrial Bank of Korea, the Korea Development Bank, and the Export-Import Bank of Korea.
4) Debentures issued by the National Agricultural Cooperative Federation and Nonghyup Bank, the National Federation of Fisheries
Cooperatives, and Suhyup Bank, Financial bonds under Article 33 (1) 1 of the Banking Act.
5) Korea Electric Power Corporation, Korea Land and Housing Corporation, Korea National Railway, Korea SMEs and Startups Agency,
Korea Gas Corporation, Korea Expressway Corporation, K-Water, KORAIL, and Korea Deposit Insurance Corporation.
6) In January 2023, the scheduled increase was deferred for an additional three months (May 1, 2023 → August 1, 2023).
C. Foreign Exchange Market Stabiliza- D. E xpansion of Multilayered Financial
tion Measures Safety Nets
Swap Transactions with the National Pen- Extension of the Currency Swap Agreement
sion Service with the United Arab Emirates
49
On September 23, the government and the Amid growing uncertainties in the global

Bank of Korea agreed to conduct foreign ex- financial economy, the Bank of Korea rein-
change swap transactions (with maturities of forced multi-layered financial safety nets by
six months or one year) with the National Pen- broadening currency swap networks with
sion Service up to a limit of 10 billion dollars major central banks. In April, the Bank ex-
until the end of 2022. The decision was made in tended the currency swap agreement with
consideration of the National Pension Service’s the Central Bank of the United Arab Emirates
impact on supply and demand imbalances (UAE), which is worth 20 billion dirhams
in the foreign exchange market, particularly or 6.1 trillion won (approximately 5.4 billion
when domestically sourcing foreign currency dollars), extending the period of the deal from
for overseas investment. Through these swap three years to five years. The currency swap
agreements, the National Pension Service was agreement with the UAE is aimed at boosting
able to secure a stable supply of foreign curren- trade and strengthening financial cooperation
cy for overseas investment without counterpar- between the two countries.
ty risk. Foreign exchange authorities and the
National Pension Service conducted foreign ex- Improvement in the Effectiveness of Finan-
change swap transactions within the specified cial Safety Nets Across the Region
limit to alleviate the demand of the National
Pension Service for spot foreign exchange pur- The Bank of Korea strove to improve the
chases, thereby stabilizing supply and demand effectiveness of financial safety nets across the
in the foreign exchange market.69) region by actively participating in discussions
with the Chiang Mai Initiative Multilaterali-
sation (CMIM),70) a multilateral currency swap
agreement between ASEAN+3 countries.
The Bank and the Korean government, in
collaboration with other ASEAN+3 countries
established a procedure for supplying funds in
third-party currencies within the region (ef-
69) In addition to swap agreements with the National Pension Service, the government supported shipbuilders' foreign
exchange forward deals to stabilize supply and demand in the foreign exchange market, and encouraged public in-
stitutional investors, such as the National Pension Service and mutual aid associations, to expand currency hedg-
ing or adjust the pace of new investments in foreign markets.
70) ASEAN+3 countries launched the Chiang Mai Initiative Multilateralisation (CMIM) in March 2010 as the multilateral
version of the Chiang Mai Initiative (CMI) in a bid to overcome the shortcomings of the existing CMI’s bilateral swap
agreements and to further strengthen its capacity to respond to crises.
fective January 2023)71) to facilitate emergency
Table Ⅱ- 8. Current Status of Korea’s Currency
funding support using local currencies, and Swap Agreements
improved funding procedures by easing the Most Recent
Maximum Amount
criteria for renewal of CMIM-PL.72) The Bank Type Counterparty Signing / Maturity
(USD basis) 1)
Extension
also participated in the 13th CMIM test run73)
50 November
to prepare for actual funding events and as- Canada No maximum amount Unspecified
2017
sess the capacity of member countries to pro- CNY 400 billion/KRW 70
October October
China trillion (about USD 59
vide each other with swift funding support in 2020 2025
billion)
the event of financial crises across the region. CHF 10 billion/KRW 11.2
Switzerland trillion (about USD 10.6 March 2021 March 2026
billion)
E. O peration of an Emergency Re -
IDR 115 trillion/KRW 10.7
sponse System in Anticipation of Fi- Indonesia trillion (about USD 10 March 2020 March 2023
nancial Instability Factors Bilateral billion)
Currency AUD 12 billion/KRW 9.6
Swaps February February
Australia trillion (about USD 8.1
The Bank of Korea regularly monitored 2020 2023
billion)
financial market conditions at home and AED 20 billion/KRW 6.1
abroad, while closely examining the develop- UAE trillion (about USD 5.4 April 2022 April 2027
billion)
ments of domestic and overseas risk factors
MYR 15 billion/KRW 5
February February
as well as their impact on the financial and Malaysia trillion (about USD 4.7
2020 2023
billion)
foreign exchange markets, by operating an
TRY 17.5 billion/KRW
emergency response system in anticipation of August
Turkey 2.3 trillion (about USD 2 August 2021
2024
the internal and external occurrence of finan- billion)
cial instability factors. Currency
13 members
Swaps Based
At a time when the volatility of price vari- of ASEAN+3
on the CMIM
countries, USD 38.4 billion2) July 2014 —
ables in domestic and overseas financial Regional
including
Financing
markets has expanded due to factors such as Hong Kong
Arrangement
the outcome of the U.S. Federal Open Mar- Notes: 1) Based on the exchange rates when the initial swap
agreements or their extensions were concluded.
ket Committee’s meeting, U.S. inflation data
2) T
he total amount of the CMIM is USD 240 billion, and
exceeding expectations, and increased geopo- Korea's contribution and the maximum amount it can draw
is USD 38.4 billion (16%).
litical risks surrounding Ukraine, the Bank’s
Monetary and Financial Task Force 74)
held a
71) In 2021, the Bank established a procedure for funding in local currencies, allowing countries to provide support
funds in their domestic currency (local currency) in addition to USD. In 2022, the Bank explored a procedure for
funding in third-country currencies within the region.
72) CMIM funding consists of the CMIM Precautionary Line (CMIM-PL), a crisis prevention facility for potential crises,
and the CMIM Stability Facility (CMIM-SF), a crisis resolution facility for actual crises.
73) Having conducted a total of 13 test runs as of 2022, the most recent 13th round primarily focused on testing the
transition from CMIM's IMF de-linked portion to the IMF linked portion.
74) The Monetary and Financial Task Force, led by the Bank’s Senior Deputy Governor, consists of Deputy Governors
in charge of monetary policy and international affairs and Director Generals of relevant departments. It compre-
hensively examines financial and foreign exchange market conditions in anticipation of financial instability factors at
home and abroad.
Meeting for Market Situation Review to close-
ly monitor the movements of price variables,
including interest rates, stock prices, exchange
rates, and influxes or outflows of foreign
investment, and comprehensively examine
51
response measures. In addition, the Bank
strengthened communication with the market

by delivering a message of market stability in
order to prevent the excessive spread of mar-
ket anxiety.
QR BOX
QR 1
Financial Stability
Report Website
4. Currency Issuance slight increase of 4.4 percent from the end of
2021. By denomination, the amount of 50,000
won banknotes in circulation increased con-
As the sole issuer of banknotes and coins siderably compared to the end of the previous
as legal tender in Korea, the Bank of Korea is year, while that of 10,000 won banknotes and
52
tasked with providing the public with curren- coins showed a downward trend.
cy services necessary for economic activities.
In 2022, the Bank strived to ensure a stable
Table Ⅱ- 9. B
anknotes and Coins Issued,
currency supply by securitizing changes fol- Withdrawn, and Outstanding, by
Denomination1)
lowing the COVID-19 pandemic in currency
supply and demand conditions for each cur-
2022
rency denomination. It also issued seven types End of 2022
Issuance Withdrawal Net Issuance Outstanding
of commemorative coins, which elicited posi- (A) (B) (A-B)
tive responses from the public. In addition, the Banknotes2) 257,195 184,280 72,915 1,723,923 (4.4)
Bank devoted multifaceted efforts to creating 50,000 won 200,642 113,346 87,296 1,529,407 (6.1)
10,000 won 52,344 66,813 -14,469 163,751 (-8.1)
an environment in which the public can use
5,000 won 2,052 2,003 49 14,390 (0.3)
currency with a sense of confidence and secu-
1,000 won 2,156 2,117 39 16,195 (0.2)
rity by using various media channels to pro-
Coins2) 285 296 -11 24,699 (-0.0)
mote the prevention of counterfeit currency
Total 257,480 184,576 72,904 1,748,623 (4.4)
from entering into circulation and by selecting
Notes: 1) Figures in parentheses refer to percentage changes
and rewarding those who contributed to the compared with the end of the previous year.
arrest of counterfeiters. It also endeavored to 2) Includes banknotes with denominations of 500 won or
lower, coins with denominations of 5 won or lower, and
remove damaged or mutilated currency from commemorative banknotes and coins.
circulation in order to ensure the integrity of Source: Bank of Korea
the circulated currency and to maintain the

soundness of the nation’s currency circulation KOMSCO produced and suppl ied the
in close cooperation with financial institu- Bank with a total of 792.7 million individual
tions, the Korea Minting, Security Printing & banknotes and coins, consisting of 710 mil-
ID Card Operating Corporation (KOMSCO), lion banknotes and 82.7 million coins, down
and other relevant institutions. by 7.4 percent from the previous year. The
number of banknotes decreased by 6.6 per-
A. Issuance cent, owing primarily to the decline in 50,000
won banknotes, while the number of coins
Responding to Currency Demand dropped by 14.1 percent, mainly due to the
general decrease in demand for coins. The to-
In 2022, the Bank of Korea issued new cur- tal value of the produced currency amounted
rency amounting to a total value of 25.748 to 19.9614 trillion won, a decrease of 26.9 per-
trillion won, while withdrawing 18.4576 tril- cent year-on-year.
lion won from circulation. Consequently, as
of year-end 2022, the value of the currency in
circulation recorded 174.8623 trillion won, a
Table Ⅱ- 10. Production of Banknotes and Coins1) Figure Ⅱ- 11. Commemorative Coins Issued in 2022
Number (million) Value (hundred million won)

Materials/
Type Design
2021 2022 2021 2022 Specifications
760.0 710.0 273,200 199,600
Banknotes2) Korea
(20.6) (-6.6) (56.5) (-26.9) National Park, 53
96.3 82.7 52 14 Gayasan
Coins2)

(-31.4) (-14.1) (-31.5) (-73.1)
856.3 792.7 273,252 199,614 Korea 99.9% silver
Total
(11.1) (-7.4) (56.4) (-26.9) National Park, Diameter 35 mm
Byeonsanbando Weight 23.0 g
Notes: 1) Figures in parentheses refer to percentage changes
compared with the end of the previous year.
2) Excludes commemorative banknotes and coins.
Korea
National Park,
Odaesan
Issuance of Seven Types of Commemorative 2023

SaeManGeum
Coins
4. Currency Issuance
25th World
Scout Jamboree
(Silver Coin I) 99.9% silver
In 2022, the Bank of Korea issued com- Diameter 33 mm
2023 Weight 15.6 g
memorative coins on three occasions. On Feb- SaeManGeum
25th World
ruary 22, the Bank issued three new types of Scout Jamboree
commemorative coins in the Korean National (Silver Coin II)
Parks series, which was designed to widely Successful

Launch of
promote the exquisite natural beauty of Korea Nuri Rocket
and the importance of ecological preservation. (Silver Coin I) 99.9% silver
Diameter 33 mm
The Korean National Parks series of com- Weight 15.6 g
Successful
memorative coins is scheduled to be issued Launch of
Nuri Rocket
through to 2023 to celebrate 22 national parks (Silver Coin II)
in Korea. In addition, as an effort to domes-
tically and globally promote the 25th World
Scout Jamboree to be held in Korea, the Bank
issued the “2023 SaeManGeum 25th World B. Circulation
Scout Jamboree” commemorative coin in two
variations on October 6, while also releasing Raising Awareness to Deter Counterfeiting
the “Successful Launch of Nuri Rocket” com-
memorative coin in two variations on Decem- The Bank of Korea conducted a variety of
ber 20 to celebrate the successful launch of the promotional campaigns to deter the produc-
Nuri rocket, a space launch vehicle developed tion and circulation of counterfeit currency.
in Korea. They included hosting an online quiz on
social media including the Bank’s official
website and social media channels; creating
videos to promote the prevention of coun-
terfeit currency75) and conducting media ad- The Bank also hosted its ninth UCC Curren-
vertising campaigns using the video through cy Protection Campaign Contest and awarded
multiple channels such as buses, high-speed prizes to 10 winners out of 247 entries, which
KTX trains, subways, outdoor electronic bill- addressed topics such as the guarantee of the
boards, and YouTube; distributing leaflets; and right to use cash, prevention of counterfeit
54
launching the Check Counterfeit Banknotes currency circulation, encouraging the recircu-
app. Furthermore, commendations were lation of coins, and promotion of the clean use
awarded on two occasions in the first and sec- of cash.
ond halves of 2022 to five police stations that
contributed to the arrest of counterfeiters.
Figure Ⅱ- 13. W
inners of the UCC Currency
In 2022, a total of 150 counterfeit banknotes Protection Campaign Contest
(November 9, 2022)
were discovered, a decrease of 26 from the 176
counterfeits detected in 2021, which marked
the lowest since 1998 when related statistics
were first published. This is mainly attribut-
able to the decrease in face-to-face commercial
transactions resulting from a recent increase
in the use of non-cash payment methods,
early detection of counterfeiters in the wake of
the expansion of CCTV installations, and the
Bank’s promotional campaigns to enhance the
public’s ability to deter counterfeit currency. Source: Bank of Korea
Efforts to Enhance the Quality of Currency in

Figure Ⅱ- 12. Counterfeit Banknotes Detected
Circulation
50,000 won 5,000 won
10,000 won 1,000 won
The Bank of Korea devoted its efforts to
(number) (number)
350 350 improving the quality of currency in circula-
tion by destroying damaged or contaminated
300 300
272
currency returned from financial institutions
250 250
and individuals for being unsuitable for re-
200 200
176 circulation. In 2022, a total of 412.68 million
150
150 150 notes and coins, valued at 2.6414 trillion won
100 100
in total were deemed unfit for recirculation
and subsequently destroyed. By currency
50 50
type, the destroyed currency was comprised
0 0
2020 2021 2022 of 356.71 million banknotes valued at 2.6333
Source: Bank of Korea trillion won and 55.96 million individual coins
valued at 8.2 billion won. Furthermore, in
75) Consisting of three sections: Part 1. How to Identify Counterfeit Banknotes, Part 2. What to Do After Finding Coun-
terfeit Banknotes, and Part 3. Guidelines for the Use of Currency Designs.
consideration of the COVID-19 situation, the
Figure Ⅱ- 14. P
oster Promoting the Guarantee of
Bank carried out contact-free promotional the Right to Use Cash
campaigns by distributing videos available
via PCs and mobile devices as well as outdoor
electronic billboards to promote the clean use
55
of cash.

Guarantee of the Right to Use Cash
Since 2020, the Bank of Korea has conduct-

ed promotional campaigns to guarantee the
right to use cash to ensure that the use of cash
is not excluded as a means of payment and
settlement in commercial transactions. This
is in response to the growing need to prevent
those who are highly dependent on cash from
facing disadvantages such as constraints on
consumption activities, especially amid the re-
cent increase in cases where some restaurants
or large supermarkets refuse to accept cash. In
2022, the Bank carried out public campaigns
promoting the guarantee of the right to use Launch of Korean Banknote Denomination
cash by placing posters on subway platform Identifier App for the Visually Impaired
screen doors in major cities and POS screens
at convenience stores, and by publishing vid- In collaboration with the National Foren-
eos on YouTube. To address the trend toward sic Service, the Bank of Korea developed the
cashless bus rides, the Bank consulted local “Korean Banknote Denomination Identifier”
governments and required them to provide vi- app for the visually impaired and released the
able alternatives to cash for citizens who have app on April 20 to coincide with the 42nd Day
no choice but to use cash. of People with Disabilities. As a mobile app
The Bank plans to continue its promotional that helps the visually impaired to identify
activities to guarantee the right to use cash in banknote denominations, it allows the user
order to prevent various adverse effects from to recognize the denomination of banknotes
arising due to Korea’s advancement toward a by sound or vibration upon activating the app
cashless society and to remind the public of and pointing the smartphone camera at a
the importance of allowing the use of cash as banknote. The distribution of the app is antici-
a payment method. pated to significantly improve the convenience
of cash use for the visually impaired in Korea,
who previously faced difficulties in identifying
banknote denominations.
Intelligence Service, and commercial banks,
Figure Ⅱ- 15. K
orean Banknote Denomination
Identifier App the Bank shared the current issues faced by
each organization, while identifying cases of
damage caused by currency counterfeiting
and discussing possible countermeasures. The
56
Bank also analyzed the current methods and
techniques of counterfeiting by examining
counterfeit banknotes obtained from the Pros-
ecutors' Office after the completion of relevant
investigations and trials.
In August, the Inter-Agency Coordination
Council on the Currency Circulation System
was newly established with the aim to com-
prehensively manage and improve the entire
domestic currency circulation system. During
its launch meeting in October, the council dis-
cussed various issues including recent trends
in currency supply and demand, the impact of
COVID-19 on the domestic currency circula-
tion system, and countermeasures to enhance
the system’s efficiency.
C. External Cooperation
The Bank of Korea continued to enhance

its cooperation with the Korea Customs Ser-
vice, the Korean National Police Agency,
KOMSCO, and the National Forensic Service
through frequent information sharing and
regular meetings on the trends and character-
istics of currency counterfeiting as well as the
detection of counterfeit banknotes. In addi-
tion, working together with a counterfeit ex-
pert group consisting of counterfeit detection
specialists from various institutions, including
the Korea Federation of Banks, the National
Figure Ⅱ- 16. S
hare of Expenditures by Payment
Box Ⅱ-1. Method1)
Cash Credit·Debit Card

Account Transfer Other
Findings of the 2021 Survey on Cash (%) (%)

100 2.6 1.4 0.9 1.8 2.4 4.8
100 57
Usage Practices by Economic Agents 14.5
21.2 19.1

80 80
In 2021, the Bank of Korea conducted a sur-
vey on cash usage practices76) among house- 60 37.4 52.0 79.8 80.2
60
86.0
58.3
holds and corporations with the objective of
40 40
gaining insight into the characteristics of the
public’s cash usage. In terms of cash usage
20 38.8 20
32.1
trends, both households and corporations ex- 21.6 13.5 14.1
8.0
hibited a decline in the share of cash in their total 0
4.9 3.3 1.2 0
2015 2018 2021 2015 2018 2021
spending as the increased adoption of non-cash (Households) (Corporations)
payment methods resulted in a decrease in the
Note: 1) Proportion of each payment method compared to total
average monthly expenditures.
scale of cash expenditures 77)
compared to 2018.
In particular, households’ cash expenditures fell
sharply and represented only 21.6 percent of
their total spending, less than half of the amount Cash holdings increased due to a higher
spent via credit and debit cards, which account- demand for cash reserves.78) The number of
ed for 58.3 percent of their expenditures. households that held cash in reserve for emer-
gency fiscal needs increased significantly from
23.3 percent in 2018 to 31.4 percent in 2021.
Meanwhile, corporations’ average cash holdings
doubled since 2018 due to an increase in both
their daily operating funds and cash holdings in
reserve. This seems to be primarily attributable
to the increased economic uncertainty in the
wake of the COVID-19 outbreak and low interest
rates.
76) As a triennial survey, the current iteration marks the third one after the two previous surveys conducted in 2015 and
2018.
77) R egarding average monthly cash expenditures, households exhibited a decline from 640,000 won in 2018 to
510,000 won in 2021, while corporations also showed a drop from 29.06 million won to 9.12 million won for the
same period.
78) Cash holdings for transactions refers to cash currently on hand to be used for daily transactions, while cash re-
serves refers to cash, other than the cash currently on hand, stored at home or in an office in anticipation for future
emergency needs.
percent of cash reserves. In the case of coins,
Figure Ⅱ- 17. C
orporate Cash Holdings by
Purpose1) the proportion of coins held by households that
were neglected and not used for daily transac-
Operating Funds Reserves
tions amounted to 76.9 percent of the value of
(10,000 won) (10,000 won)
400 400 the total coin holdings.
58 360
300 300
Figure Ⅱ- 18. Share of Household Cash Holdings
by Currency Type (value basis)
200 178 200

50,000 - won Notes 10,000 - won Notes
153
5,000 - won Notes 1,000 - won Notes Coins
110 0 20 40 60 80 100 (%)
100 100
69
50
Cash for
0 0 Re- 65.9 30.6
2015 2018 2021 serves
Note: 1) Based on average monthly holdings.

Cash for
By currency type, 50,000 won and 10,000 Transac- 48.1 41.9
tions
won banknotes were the most prevalent to be
saved and used, while coins appear to have
0 20 40 60 80 100 (%)
been largely abandoned. Regarding the share of
currency denomination of cash held by house-
holds, 50,000 won and 10,000 won banknotes
accounted for 48.1 percent and 41.9 percent of
cash used for transactions, respectively, while
50,000 won banknotes accounted for 65.9
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5. Payment and Settlement creased by 11.9% from the year 2021.
Business
Figure Ⅱ- 19. B
OK-Wire+ Funds Transfer Values
(daily average)
The Bank of Korea has made continuous
Foreign Exchange Settlement Funds Call Transaction Funds
59
efforts to improve the payment and settlement Transfers between BOK and Participants1) Net Settlement Funds
Other Securities Settlement Funds
infrastructure and secure its stability amid

(trillion won) (trillion won)
the digital transformation of finance. While 600 600
ensuring the stable operation of BOK-Wire+, 524.3

488.5 16.8
500 23.1 500
a real-time gross settlement (RTGS) system, 423.6
14.5
20.6 27.1
23.1 27.5
the Bank provided intraday liquidity support 400 369.9
14.8
21.6
25.9 400
14.6 18.5
22.5 160.0
to financial institutions suffering temporary 21.1
16.1 147.0
300 18.1 110.1 300
shortages of settlement liquidity to facilitate 85.5
the smooth settlement of funds. It also strived 200 200
269.9
to guarantee safe and efficient payments and 100 214.6 236.1 257.4
100
settlements by overseeing the domestic pay-
5. Payment and Settlement Business

0 0
ment and settlement systems as a whole79) and 2019 2020 2021 2022
cooperating with international organizations. Note: 1) Includes payments on government and public bond
transactions, Treasury funds transfers, and BOK loans.
A. Operation of BOK-Wire+
Trends in Korean Won Funds Transfers Intraday Liquidity Support
Throughout 2022, the average daily value In order to prepare for the eventuality of
of Korean won funds transfers through BOK the spread of settlement risks across BOK-
Wire+ totaled 524.3 trillion won, up by 7.3 Wire+ as a whole due to settlement delays
percent from the previous year. By type of caused by temporary liquidity shortages in
settlement funds, securities settlement funds some participating institutions, the Bank of
continued their upward trend following the Korea supplies BOK-Wire+ participants with
previous year, centered on inter-institutional settlement funds to cover temporary intraday
repo transactions. The inter-institutional net liquidity shortages. In 2022, the amount of the
settlement funds transferred through the re- Bank’s intraday liquidity provision averaged
tail payment system increased by 6.1 percent 3,024.7 billion won per day, down by 13.4
from the previous year, particularly in the percent from the previous year. Specifically,
banking network, including Internet banking. the amount of intraday overdraft80) support
The amount of funds for call transactions in- averaged 881.1 billion won daily, up by 39.1
79) This refers to the central bank’s responsibility to conduct monitoring and regular or ad hoc assessments to en-
hance safety and efficiency in the payment and settlement systems, as well as to encourage improvements in the
systems as needed.
80) This refers to credit provided to financial institutions by the Bank of Korea on the condition of intraday redemption,
with the objective of addressing temporary intraday liquidity shortages.
percent from the previous year, while that of Infrastructures83) (PFMIs)84) and recommends
intraday RP81) was a daily average of 2,143.6 improvement measures to address any gaps
billion won, down by 25.0 percent. or shortcomings. In 2022, the Bank conducted
assessments of major payment and settlement
systems operated by the Korea Exchange
Table Ⅱ- 11. Supply of Intraday Liquidity
60
(daily average) (KRX) and Korea Securities Depository (KSD).
(billion won, %) The assessment results indicated that the KRX
2020 2021 2022 Change2) complied with most of the requirements of
Intraday
603.0 633.2 881.1 39.1 the PFMIs. However, the Bank recommend-
Overdrafts1)
Intraday Repos 2,883.2 2,858.9 2,143.6 -25.0 ed improvements in some areas such as the
Total 3,486.2 3,492.1 3,024.7 -13.4 comprehensive risk management system and
Notes: 1) Based on average net intraday overdraft balance obtained management of operational risk and cyber
after subtracting the balances of the deposit accounts used resilience. The KSD was assessed to be mostly
exclusively for settlement from the daily overdraft amounts.
2) A percentage change from 2021 to 2022. compliant with the PFMIs but also recom-
Source: Bank of Korea mended to make improvements in some areas,
including market data disclosure and man-
B. Oversight and Risk Management agement of operational risk and credit risk.
Assessment of Financial Market Infrastruc- Joint Examinations of Payment and Settle-

ture ment Activities of Financial Institutions
The Bank of Korea conducts assessments To review the appropriateness of financial

of important payment and settlement sys- institutions’ payment and settlement activ-
tems by adopting international standards 82)
ities, the Bank of Korea and the Financial
in the field of payments and settlements in- Supervisory Service conducted joint examina-
cluding the Principles for Financial Market tions of two domestic banks and one financial
81) To shift the BOK-Wire+ settlement of funds for securities transactions to an earlier time in the trading day and to
mitigate the concentration of settlement around closing time, a system for intraday liquidity support through the use
of repo-type instruments was established on the condition of intraday redemption, targeting the Korea Exchange
and financial investment companies.
82) As supplementary guidelines for the PFMIs, the CPMI-IOSCO has enacted additional international standards in-
cluding the Guidance on Cyber Resilience for Financial Market Infrastructures in June 2016, Recovery of Financial
Market Infrastructures in July 2017, and Resilience of Central Counterparties (CCPs) in July 2017.
83) FMIs refer to multilateral systems used by economic entities for purposes of clearing, settling, or recording regular
payments or financial transactions They consist of systemically important payment systems (PSs), central counter-
parties (CCPs), central securities depositories (CSDs), securities settlement systems (SSSs), and trade repositories
(TRs).
84) The PFMIs are the international standards for payment and settlement systems that were set and published in April
2012 by the Committee on Payments and Market Infrastructures (CPMI) of the BIS, in partnership with the Interna-
tional Organization of Securities Commissions (IOSCO). The PFMIs were established in response to major issues
that had emerged due to the global financial crisis regarding the need for structural reforms of the over-the-counter
derivatives markets and the strengthening of international standards for the operation of financial market infrastruc-
ture.
investment company.85) planned to start in February 2023, as a means
The results of the examination showed to stabilize the market. 88) In addition, for a
that in general, they were properly managing limited period of three months, it added bank
their payments and settlements, including the debentures and bonds issued by nine public
management of their intraday liquidity and organizations to the scope of eligible collateral
61
funds transfers. However, they were advised for net settlements.89)
to improve the funds transfer procedures and

IT system continuity plans for emergencies
Table Ⅱ- 12. Timeline for Raising Collateral-
such as system failure, disasters, and terror to-Net Debit Cap Ratio for
Guaranteeing Net Settlements1)
attacks and reinforce CMA-related risk man-
(%)
agement, 86) as well as partially supplement February May February May February May
Present
liquidity crisis response systems, such as early 2023 2023 2024 2024 2025 2025
warning indicators and stress tests. Original 80 80 90 90 100 100
70
Rescheduled 70 70 80 80 90 90
Note: 1) Based on the October 2022 announcement, the increase
Stable Operation of the Net Settlement Risk
will be delayed for three months as of January 2023 (80%
Management System

increase: May 2023 → August 2023).
In response to deteriorated financial market

liquidity following the spread of COVID-19 C. Improvement of Payment and Settle-
in early 2020, the Bank of Korea temporarily ment Systems
lowered the collateral-to-net debit cap ratio87)
for guaranteeing net settlements of partici- Strengthening of Research on Central Bank
pating banks from 70 percent to 50 percent in Digital Currencies
April 2020. From February 1, 2022, the ratio
was raised back to 70 percent. At the same The Bank of Korea stepped up all of its re-
time, the Bank announced a plan to readjust search activities on central bank digital cur-
the ratio upward in phases with a target of 100 rencies (CBDCs) to proactively respond to the
percent from February 2023 to 2025. However, rapid evolution toward the digital economy.
as the short-term money market has been ex- First, as part of an effort to secure a relevant
periencing signs of instability again since Oc- technological foundation, a CBDC simulation
tober 2022, it has announced a three-month study was conducted from August 2021 to
delay for the scheduled ratio hike, which was June 2022. In 2021, the Bank created a cloud-
85) During 2022, the Bank of Korea conducted only one joint examination of financial investment companies due to the
spread of COVID-19, whereas one is ordinarily conducted three times a year. Instead, the Bank reinforced the non-
face-to-face monitoring activities for settlement risk management by such companies.
86) It was recommended that RP-type CMAs (Cash Management Accounts) have limits on holdings of bonds issued
by the same person.
87) The PFMIs require a collateral ratio (100%) that is sufficient to fully cover credit exposures.
88) For detailed information on the Bank of Korea's other market stabilization measures, see B. Financial Market Stabi-
lization Measures under Section 3, Chapter II.
89) In January 2023, the Bank of Korea extended the application of this measure for an additional three months in light
of financial market conditions and accordingly adjusted the timetable for raising the collateral-to-net debit cap ratio.
Figure Ⅱ- 20. Scope of CBDC Research Process
62
based virtual testing environment and veri- thoroughly analyzed the trend in global dis-
fied the normal operation of the CBDC’s basic cussions about major issues related to CBDC
functions. 90)
In 2022, it implemented more ad- adoption, such as designs and operation
vanced functions, such as offline payments, 91)
methods, and expected spillovers. In addition,
digital asset transactions, and cross-border it conducted research projects jointly with
transfers while exploring the possibility of ap- members of academia into the impacts of
plying new information technology including CBDC adoption on the Bank’s major responsi-
enhanced protection of private information. bilities and roles, such as monetary policy and
In addition, it has been conducting additional financial stability, and released the research
tests 92)
in cooperation with 15 financial insti- results in the special issue of the Economic
tutions to more closely assess the functions Analysis, “CBDC and Card Payment Market”
and performance of the system built for the in December 2022. The Bank also reinforced
simulation study.93) external communications on the subject of
Next, the Bank continued to study various CBDCs by actively sharing the results of these
institutional issues and spillover effects that studies through the CBDC Policy Research
are expected to arise with the adoption of a Symposium (October 2022) and the Payment
CBDC. First of all, it published a report that and Settlement System Conference (Novem-
90) The basic functions of a CBDC refer to manufacturing, issuance, circulation, redemption, and disposal.
91) Offline payments refers to the function of transfers and payments using a CBDC in situations when computer de-
vices (such as mobile devices, IC cards, etc.) of both the sender and the recipient are not connected to the internet.
92) Additional tests refers to a study to verify the functionality and security of the system by connecting the CBDC sim-
ulation system (virtual environment) of the Bank of Korea and the test servers of financial institutions.
93) It should be noted that the Bank of Korea has yet to decide whether to adopt a CBDC or not, or on any design
method, and that this simulation study aims to simply test the technical feasibility of specific designs (the distribut-
ed ledger of the hybrid model), signifying that the final design may differ from those used in the tests.
ber 2022).94) In addition, it has been closely ob- system, which inherently entails credit risk,
serving external environments related to CB- there have been arg uments in favor of a
DCs and sharing the progress in its research transition to the Real Time Gross Settlement
projects with major countries and internation- (RTGS) system,97) which can fundamental-
al organizations to strengthen cooperation. ly eliminate credit risk.98) Meanwhile, major
63
Going forward, the Bank of Korea will fur- countries that have recently established their
ther solidify the foundation for the adoption of own fast payment systems, such as the United

CBDCs by continuing studies on technology, States and the European Union (EU), have
institutions, and spillover effects to explore mostly adopted RTGS-based systems. In
which CBDC design models and institutions addition, the international community has
are best suitable for the financial and econom- been increasingly discussing the international
ic environment of Korea. In addition, it will linkages between RTGS-based fast payment
examine various use cases of CBDCs in co- systems to improve high-cost, low-efficiency
operation with relevant domestic institutions, cross-border remittances. Accordingly, the
the private sector, and international organiza- Bank of Korea will forge an RTGS-based fast
tions. payment system as a means to reduce credit

risk and enhance payment safety, as well as
Efforts to Lay the Foundation for the Intro- prepare for the interconnection of cross-bor-
duction of an RTGS-Based Fast Payment der payment systems.
System
Efforts to Intensify Financial Inclusion by
Korea has been operating the world's first Expanding Channels to Access the Financial
fast payment system 95)
since 2001. However, Map Service
as the final settlements between financial in-
stitutions through the BOK-Wire+ are carried Through the Committee on Financial In-
out using the Deferred Net Settlement (DNS)96) formatization Promotion (CFIP),99) the Bank
94) For detailed information, watch the video on the Bank of Korea's YouTube channel.
95) The fast payment system refers to a payment and settlement system that provides fund transfer services in which
the payer's payment instruction and the recipient's receipt of funds are carried out simultaneously or in near re-
al-time, 24 hours a day, seven days a week.
96) Deferred net settlement refers to a financial instrument where funds are sent in advance to the recipient (customer),
and the amounts to be sent and received between participating institutions for funds transfers made during a pre-
defined period are collected and offset before settling the difference.
97) R
TGS refers to the real-time settlement of payments between participating institutions for each fund transfer.
98) The DNS-based fast payment system is exposed to credit risks in that the recipient institution may not receive the
funds for reasons such as if the payer institution enters into bankruptcy before the payment between the partic-
ipating institutions is completed, whereas an RTGS-based system can be free of such risks as it processes the
payments between participating institutions in real-time for each transfer case.
99) Originally formed in September 1984 as the Committee on Financial Computerization and chaired by the Governor
of the Bank of Korea, the CFIP spearheaded the establishment of major interbank shared networks, such as the
CD/ATM System and the Interbank Funds Transfer System. In November 2009, it was restructured to be chaired
by the Senior Deputy Governor of the Bank of Korea and given its current name. As of the end of 2022, 32 financial
institutions and related organizations, along with the Bank of Korea, participate in the CFIP, which oversees the
working committee for the selection of joint projects for financial informatization and prior deliberation on financial
standardization.
of Korea has been working with the financial Bank of Korea has continued to participate in
sector to enhance the usability of the ATM discussions about major global payment and
system as cash access infrastructure to mini- settlement issues. In particular, the Bank has
mize any inconvenience in consumer access to taken part in the CPMI’s practical work to im-
cash. In December 2021, as part of this effort, prove the high-cost, low-efficiency structure
64
the Bank launched the Fin Map service, which of cross-border payments, thereby identifying
indicates ATM locations and provides addi- trends in related discussions and establishing
tional information such as supportive features countermeasures, which laid the groundwork
for those with physical challenges in the form for the Bank to participate in the discussions
of a mobile application. In addition, since No- with the central banks of major countries.
vember 2022, the ATM location information Meanwhile, as a member of the steering
provided by the Fin Map service has become group100) of the CPMI-IOSCO, the Bank of
available through popular map platforms, Korea has actively engaged in discussions on
allowing users to have access to it without measures to apply the PFMIs to stablecoin ar-
needing to install the Fin Map application. rangements. The Bank will make constructive
contributions to the creation of a global mon-
itoring system of stablecoins by closely fol-
Figure Ⅱ- 21. Provision of Private Map Platform
Information after Interlinking with lowing the progress of related discussions and
FIN Map Service DB (example)
voicing opinions. In addition, it was commit-
ted to identifying trends in the introduction of
regulatory systems for crypto-assets in major
countries and proposed policy alternatives to
support related in-depth discussions on topics
such as the enactment of the Framework Act
on Digital Assets in Korea. In August 2022, it
translated the full text of the EU’s “Proposal
for a Regulation of the European Parliament
Main Page ATM and Branch Information Page
and of the Council on Markets in Crypto-As-
Source: TMAP
sets, and amending Directive (EU) 2019/1937
(MiCA)” and published it as a booklet,101)
D. International Cooperation while in December, it also published “Major
Issues and Legislative Directions for Cryp-
As a member of the Committee on Pay- to-asset Regulation.”
ments and Market Infrastructures (CPMI), the In addition, as the secretariat of the Korean
consultative body that sets international stan- Subcommittee of the Technical Committee on
dards for payments and settlements within the Financial Services (TC68) under the Interna-
Bank for International Settlement (BIS), the tional Organization for Standardization (ISO),
100) The steering group of the CPMI-IOSCO is a board of representatives formed to effectively coordinate common
issues, such as monitoring and regulation of Financial Market Infrastructures (FMIs), and usually holds regular
meetings two or three times a year.
101) The MiCA is the world's first standalone cryptocurrency legislation bill and is intended to protect users and inves-
tors without stifling developments and innovations in the blockchain market.
the Bank of Korea attended the ISO/TC68 An-
nual Meeting to share the status of a total of
55 standards including those on the classifica-
tion of financial instruments and the progress
of the development and amendment of 19 new
65
standards as well as discuss related issues. In
particular, the Bank shared with the partici-

pating countries the progress of new interna-
tional standards proposed and developed by
Korea, namely “Standard for Management of
Segregated Biometric Information” and “Se-
curity Controls and Implementation Guidance
for Third Party Payment Service Providers.”
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Video Recording of
Bank of Korea
Conference on
the Payments and
Settlement System
6. Foreign Exchange and In- served to alleviate the imbalance of supply
ternational Cooperation and demand and herd behavior in the foreign
exchange market, thereby leading to reducing
the upward pressure on the USD/KRW ex-
A. Foreign Exchange change rate.
66
Efforts to Stabilize the Foreign Exchange

Table Ⅱ- 13. N
et Transactions by Foreign Ex-
Market change Authorities1)
(hundred million USD)
Period Amount
In 2022, the USD/KRW exchange rate expe-
2021 Q1 -1.03
rienced considerable volatility due to various
2021 Q2 0.00
factors including shifting expectations for the
2021 Q3 -71.42
pace of interest rate hikes by the U.S. Federal
2021 Q4 -68.85
Reserve, the Russia-Ukraine war, and con-
2022 Q1 -83.11
cerns about a global economic slowdown. In 2022 Q1 -154.09
terms of the domestic foreign exchange supply 2022 Q3 -175.43
and demand, demand for the U.S. dollar re- Note: 1) Details of net transactions during the period, defined as total
mained relatively dominant due to the reduc- buys minus total sells.
tion in the current account surplus resulting
from rising commodity prices and continued
substantial overseas investment by domestic Continued Efforts to Improve the Foreign Ex-
residents, which collectively contributed to change Market
adding upward pressure on the USD/KRW
exchange rate. In tandem with the government, the Bank
As part of its efforts to ensure stability in of Korea promoted measures to invigorate
the foreign exchange market, the Bank of foreign exchange market transactions, while
Korea worked with the government to devel- conducting ongoing discussions focused on
op measures for balancing foreign exchange enhancing the overall market structure.
supply and demand, such as foreign exchange First of all, in an effort to activate trading
swap transactions with the National Pension in USD/KRW spot markets, the Bank desig-
Service.102) The Bank also implemented the nated six domestic banks with excellent two-
foreign exchange market stabilization mea- way trading performance as leading banks in
sures in a timely manner in the event of ex- March. Subsequently, meetings of an advisory
cessive herd behavior in terms of expectations group for foreign exchange market develop-
and severe instability observed in the market. ment were held with the participation of for-
As a result, the scale of net sales of the U.S. eign exchange authorities and the aforemen-
dollar by foreign exchange authorities in- tioned leading banks, in which they continued
creased during the period from the second to discussions on the development of the foreign
third quarters, when exchange rate volatility exchange market and reforming the relevant
was particularly pronounced in the market. system.
These actions by foreign exchange authorities Furthermore, the Bank engaged in active
102) For detailed information, see C. Foreign Exchange Market Stabilization Measures under Section 3, Chapter II.
discussions with foreign exchange market by investing its foreign exchange reserves in
participants on measures to improve the assets that can be promptly liquidated in glob-
overall market structure, such as extending al financial markets in the event of escalating
the opening hours of the foreign exchange uncertainty. Meanwhile, it also endeavors to
market, allowing authorized overseas foreign enhance profitability by employing effective
67
financial institutions to directly participate in investment strategies such as flexibly adjust-
the domestic foreign exchange market, and ing the composition of currencies and instru-

advancing market infrastructure. 103)
ments in response to changes in global finan-
cial markets.
Improvement of the Foreign Exchange
Transaction System Scale and Composition of the Foreign Ex-
change Reserves
The online review system for foreign ex-
change transactions104), launched initially at As of the end of 2022, Korea’s foreign ex-
the Bank of Korea headquarters in November change reserves totaled 423.2 billion dollars,
2021, has been expanded and implemented at representing a decrease of 40 billion dollars
6. Foreign Exchange and International Cooperation

all regional branches to ensure the system’s from the end of the previous year. The coun-
nationwide acceptability and enhance the try’s foreign exchange holdings, which in-
general public’s convenience. During the pro- clude securities and deposits and account for
cess, the Bank continued to make improve- the majority of its foreign exchange reserves,
ments to the system by adding functions such amounted to 399 billion dollars, down by 39.3
as anti-forgery of transaction certificates and billion dollars from the previous year-end.
creation of online user accounts. Its Special Drawing Rights (SDRs) and IMF
position recorded 14.8 billion dollars and 4.5
B. Reserves Management billion dollars, respectively, while it held 4.8
billion dollars in gold, the same amount as at
The Bank of Korea manages the national the end of 2021.
foreign exchange reserves, which are com-
prised of the country’s external payment Table Ⅱ- 14. C
omposition of Foreign Exchange
Reserves (year-end)
reserve assets of last resort, based on the prin-
(million USD)
ciple of enhancing profitability while placing
2020 2021(A) 2022(B) Change(B-A)
a top priority on securing safety and liquidity. Foreign
In order to preserve the value of its invested exchange 443,098 463,118 423,164 -39,955
reserves
assets, the Bank places tight restrictions on
Foreign
investing in non-investment-grade bonds. As 430,117 438,319 399,043 -39,276
exchange
of the end of 2022, bonds with a rating of A or SDR 3,371 15,370 14,836 -533
higher accounted for 96.7 percent of its bond Reserve
4,815 4,635 4,490 -145
position at IMF
holdings. The Bank also maintains a high lev-
Gold 4,795 4,795 4,795 -
el of liquidity in its foreign exchange reserves
103) Based on these discussion results, foreign exchange authorities announced the “Plan for Improving the Structure
of the Foreign Exchange Market” on February 7, 2023, with the aim of enhancing market accessibility on the inter-
national level.
104) Online Review System for Foreign Exchange Transactions.
Tranching Reserve Assets methods.
The Bank of Korea separates its foreign Operating with a Focus on Securing Liquidity
exchange reserves into a short-term liquidity
tranche and an investment tranche, in ac- In 2022, the management of foreign ex-
68
cordance with the purpose of holding each change reserves faced significant challenges
tranche. The investment tranche is divided due to deteriorating conditions in global
into an internally-managed tranche and an financial markets, such as heightened geopo-
externally-managed tranche. litical uncertainty due to the Russia-Ukraine
The short-term liquidity tranche is main- war, sharp policy rate hikes by the U.S. Fed-
tained at a predetermined minimum and eral Reserve in response to the persistence of
invested principally in short-term financial in- high inflation, and a contraction in investor
struments, such as short-term treasury bonds sentiment. A sharp rise in interest rates led to
and deposits, since they incur minimal trans- a fall in stock prices, while an intensified flight
action costs and can be liquidated immediately to quality brought about a prolonged period of
for timely responses to daily foreign exchange a strong U.S. dollar.
influxes and outflows, or to temporarily rising From the fourth quarter onward, however,
demand for foreign exchange faced by the the margin of increase in interest rates con-
Bank in its operation of the foreign exchange tracted, and the previously-strong U.S. dollar
reserves. shifted toward a weakening trend, influenced
In cases where the balance of the short-term by expectations for a slower pace of policy rate
liquidity tranche shows significant changes hikes by the U.S. Federal Reserve due to con-
in its size owing to flows in and out of the cerns of an economic slowdown and a slower
foreign exchange reserves, the Bank transfers inflation rate. After a consistent decline, stock
foreign exchange reserves to the internal- prices rebounded thanks to the weakening
ly-managed investment tranche in order to of risk aversion and China’s decision to ease
adjust the size of tranches as appropriate. quarantine measures.
In order to obtain stable profits while ensur- Amidst heightened volatility in the domestic
ing a high level of liquidity, the Bank invests foreign exchange market, there was an urgent
its internally-managed investment tranche in need to supply foreign exchange liquidity in a
short- and long-term bonds, such as govern- timely manner in order to stabilize the foreign
ment bonds, agency bonds, corporate bonds, exchange market. Under these circumstanc-
and Asset-Backed Securities (ABSs), which es, the Bank of Korea responded proactively
are denominated in major foreign currencies. by selling its bond holdings. Following the
T he ex ter na l ly-m a nag ed i nvest ment increase in the frequency and volume of
tranche, comprising bonds and equities, is en- foreign exchange reserve transfers from the
trusted to the Korea Investment Corporation internally-managed investment tranche to
(KIC) and to major domestic and international the short-term liquidity tranche during the re-
asset management companies to enhance sponse process, the Bank managed its foreign
profitability by using their market expertise exchange reserves with a focus on expanding
and through the diversification of investment liquidity in anticipation of the possibility of
continued market instability, by increasing the
Table Ⅱ- 15. P
ercentage Shares in Foreign
proportion of the short-term liquidity tranche. Assets1) (year-end)
With regard to the tranches, the size of (%, %p)
the short-term liquidity tranche expanded 2020 2021(A) 2022(B) Change(B-A)
compared to the previous year, while within 1. By purpose

Short–term liquidity 69
the investment tranche, the proportion of the tranche
5.1 5.2 10.0 4.8
internally-managed investment tranche con- Investment tranche

tracted and that of the externally-managed Internally–
73.9 72.0 65.7 -6.3
investment tranche slightly expanded. At the managed
Externally–
end of 2022, 10.0 percent of the Bank’s for- 21.0 22.8 24.3 1.5
managed
eign exchange reserves were managed in the 2. By currency
short-term liquidity tranche, 65.7 percent in U.S. dollars 67.7 68.3 72.0 3.7
the internally-managed investment tranche, Others 32.3 31.7 28.0 -3.7
and 24.3 percent in the externally-managed 3. By asset class
investment tranche. Deposits 7.1 6.9 12.6 5.7
As for the currency composition, the pro- Securities

portion of U.S. dollar holdings increased Government
44.5 44.9 39.4 -5.5
bonds
compared to the previous year-end, as the U.S.
Agency bonds 14.4 14.1 14.1 0.0
dollar strengthened due to stronger risk aver- Corporate bonds2) 13.6 12.9 11.0 -1.9
sion and flight to quality. ABS 11.5 10.8 11.5 0.7
In terms of asset classes, the Bank expanded Equities 8.9 10.4 11.4 1.0
the share of its holdings in deposits as well as Total 100.0 100.0 100.0 -
ABSs and equities among securities. However, Notes: 1) T his table is a breakdown of the “foreign exchange” item in
Table II-14, showing assets that are owned by the Bank of
it reduced the share of holdings in government
Korea.
bonds and corporate bonds among securities. 2) Including corporate bond ETFs.
Defending Profitability by Building Hedging

Positions Against Increases in Interest Rates
and the Strong U.S. Dollar
Amid concerns about the potential decline

in the rate of return on foreign exchange re-
serves due to an increase in interest rates, the
Bank of Korea made an effective response to
the increased market volatility, employing a
range of measures including selling off Trea-
sury bonds in the spot and futures markets,
building positions for FX hedging, and exe-
cuting strategies to anticipate a widening in-
version of long- and short-term interest rates,
despite difficulties in portfolio management various risks through the expansion of finan-
caused by the supply of liquidity to the do- cial institutions subject to collateral manage-
mestic foreign exchange market. ment, advancement of improvements in the
In addition, there was a continued effort to foreign reserves operation and management
enhance the efficiency of foreign exchange system, and expansion of the scope of busi-
70
reserves allocation, by flexibly adjusting the ness automation.
proportion of the externally-managed invest-
ment tranche, equities, and corporate bonds, Elevating the Capabilities of Domestic Finan-
based on the adoption of a rebalancing system cial Companies and Supporting the Devel-
between the internally-managed investment opment of the Finance Industry
tranche and the externally-managed invest-
ment tranche, as well as the launch of invest- The Bank of Korea has been enhancing the
ment in corporate bond ETFs. capabilities of domestic financial companies
and actively supporting the development of
Strengthening the Risk Management of For- the domestic finance industry by selecting do-
eign Exchange Reserves mestic financial institutions as trading part-
ners and external asset management compa-
The Bank of Korea strengthened the risk nies to manage its foreign exchange reserves.
management of its foreign exchange reserves In 2022, the Bank conducted transactions of
in response to increased volatility in global foreign bonds (3.84 billion dollars) with five
financial markets. domestic securities companies in the course of
In anticipation of increased external risks, its internal management of foreign exchange
the Bank established and continuously re- reserves, while entrusting parts of its invest-
viewed an emergency response plan and a ment in Chinese equities (590 million dollars),
business continuity plan for foreign exchange equities in advanced countries (1.75 billion
reserves management, as a means to ensure dollars), and bonds in advanced countries (700
a more stable response to changes in invest- million dollars) to five domestic asset man-
ment conditions. agement companies.105) As part of its measures
Meanwhile, the efficiency and timeliness of to expand the scope of foreign exchange re-
risk management were enhanced by chang- serves that are externally managed by domes-
ing the credit risk analysis model to more tic financial companies, the Bank initiated the
accurately analyze the credit risk of foreign entrustment of bonds in advanced countries
exchange reserves and to shorten the interval in January 2022.
between calculations of risk indicators. The Bank of Korea plans to gradually in-
In addition, market and credit risks were crease the size of foreign exchange reserves
appropriately managed through stress tests entrusted to domestic financial institutions to
under hypothetical crises, setting investment a substantial level, by annually evaluating the
ceilings, and the analysis of investment condi- entrustment conditions of domestic financial
tions. Continued efforts were placed to reduce companies and their management capabilities.
105) Foreign exchange reserves entrusted to domestic asset management companies account for 3.9 percent of the
total externally-managed investment tranche.
In addition, the Bank will add domestic asset across its foreign exchange reserves, thus lay-
management companies with adequate sys- ing the foundation for the medium-to-long-
tems and proven capabilities to the list of en- term goal of introducing an ESG integration
trusted institutions. Meanwhile, it will further strategy. The application of negative screening
diversify its strategy in managing entrusted was completed for corporate bonds of the in-
71
funds by incorporating an active method to its ternally-managed investment tranche, and is
existing passive approach in consideration of now undergoing rapid expansion to include

changes in market conditions. bonds and equities in the case of the external-
ly-managed investment tranche.
As of the end of 2022, ESG-related bonds
Table Ⅱ- 16. Use of Domestic Financial Institutions
in Reserves Management amounted to 6.85 billion dollars in internal-
Date of ly-managed assets and 1.26 billion dollars
Classification Instruments Institutions1) Size Commence- in externally-managed assets, while ESG-
ment
themed funds reached 6.53 billion dollars in
Transactions of foreign Government bonds,
Securities 3.84 billion equities.
currency-denominated agency bonds, January 2018
companies(5) dollars2)
bonds corporate bonds

Asset management 590 million
Chinese equities June 2012
companies(3) dollars3) Table Ⅱ- 17. Investment in ESG-related Assets
External management Advanced countries Asset management 1.75 billion (year-end)
April 2019
of equities and bonds equities companies(4) dollars3) (hundred million USD)
Advanced countries Asset management 700 million Size3)

January 2022
bonds companies(3) dollars3) Instruments Management 2021 2022 Change
2020
Notes: 1) Numbers in parentheses refer to the number of trading- (A) (B) (B-A)
eligible institutions.
Internal 34.9 58.2 68.5 10.3
2) Based on the volume of transactions in 2022. Bonds1)
3) Based on the entrusted amount. External 8.9 14.1 12.6 -1.5
Source: Bank of Korea Equities2) External 10.8 17.9 65.3 47.4
Total 54.5 90.2 146.5 56.3
Strengthening Public Accountability by In- Notes: 1) ESG bonds including green, social, and sustainability
creasing Investment in ESG Assets bonds.

2) Based on ESG-themed funds.
3) Based on market value.
The Bank of Korea has been gradually ex-
panding its range of ESG investments106) since
it began to invest in ESG stocks as external- Strengthening International Cooperation on
ly-managed assets in December 2019 in a bid Foreign Exchange Reserves Management
to meet the demand for public accountability
as the nation’s central bank and improve the The Bank of Korea enhanced its interna-
profitability of foreign exchange reserves. tional cooperation by continuing to take part
In 2022, the Bank continued to purchase in discussions about issues related to foreign
green, social, and sustainability bonds, while exchange reserves management with inter-
applying a negative screening 107) process national organizations and overseas central
106) This refers to a kind of investment method that considers non-financial aspects, such as environmental, social,
and governance categories, along with financial factors, in the course of investment decision-making.
107) As a part of the ESG investment strategy, this process excludes an industry or company that fails to meet the ESG
standards from investment targets.
banks. cy coordination with the international financial
Through an annual workshop with the community and fulfill Korea’s responsibilities
World Bank and regular consultations with in line with its elevated international status.
the Swiss National Bank, the Bank made reg-
ular exchanges and business and information Active Participation in Global Policy Coordi-
72 nation
sharing with departments in charge of foreign
exchange reserves management. In 2022, it
also shared business insights regarding its for- The Bank of Korea participated actively in
eign exchange reserves management with the global discussions to coordinate policies at
Banque de France and the Narodowy Bank international organizations and consultative
Polski. Furthermore, business consultations bodies, through which it voiced Korea’s posi-
were conducted with the Ministry of Finance tion while contributing to the formulation of
of Japan and the People’s Bank of China, with policy responses to address global financial
the objective of exchanging opinions on the issues.
management of investment assets. At the BIS Bimonthly meetings on six occa-
Additionally, the Bank participated in inter- sions, and at the IMF and World Bank Group
national forums and seminars focused on the meetings on two occasions, the Bank took an
management of foreign exchange reserves at active part in discussions related to medium-
the invitation of international organizations and long-term policy challenges and financial
and other central banks to share the Bank’s and economic issues such as a trend of glob-
experience on managing foreign exchange al inflation, the impact of monetary policy
reserves such as ESG investment and asset tightening and responses to climate change.
allocation. Through these meetings, the Bank strove to
reflect Korea’s position during the policy coor-
C. International Cooperation dination process of the international financial
community. In particular, it participated in
Through global cooperation channels, the the meetings of BIS Board of Directors, which
Bank of Korea identified the rapidly-changing is essentially the top decision-making body
global economic and financial conditions and of the BIS, contributing to determining the
policies in major countries after the pandemic medium- and long-term strategy and policy
in a timely manner to elevate the effectiveness direction of the BIS, and helped in quickly
of policy response. identifying economic and financial issues in
In line with the resumption of face-to-face major countries and strengthening policy co-
meetings, which had been suspended for a operation and coordination.
long period of time due to COVID-19, the Bank In collaboration with the Korean gov-
actively participated in discussions on pending ernment, the Bank also participated in G20
issues with international organizations and meetings of finance ministers and central
consultative bodies such as the BIS, G20, and bank governors on four occasions and those
IMF. It also successfully hosted the 27th Ex- of deputy finance ministers and central bank
ecutives' Meeting of East Asia-Pacific Central deputy governors on five occasions. At the
Banks (EMEAP) Governors’ Meeting as the meetings, the Bank discussed issues such as
chair of this year’s meeting to strengthen poli- responding to global high inflation, the recov-
ery of the global economy, and international en financial cooperative relationships among
capital flows. Furthermore, it actively par- regional member countries.
ticipated in discussions about issues such as First, the Bank strived to strengthen region-
enhancing cross-border payments, financial al financial cooperation in the ASEAN+3. In
inclusion, crypto-assets and CBDCs, respons- collaboration with the government, it partici-
73
es to climate change, and the Debt Service pated in a meeting of ASEAN+3 finance min-
Suspension Initiative (DSSI) for low-income isters and central bank governors108) on one

countries. occasion, meetings of deputy finance min-
isters and central bank deputy governors on
two occasions, and working-level meetings on
Table Ⅱ- 18. Main Themes of International
Forums (2022) four occasions. Through these meetings, the
Forums Main Themes Bank contributed to the revision of operation-
BIS Bimonthly Meetings Inflation, wage growth, the pace of

al guidelines to reflect the policy of allowing
(January/March/May, monetary policy tightening, post-pandemic funding support using third-party local cur-
video conferences; house prices, capital flows in emerging
June/September/ markets, commodity markets, cyber risks rencies and easing the criteria for approving
November, Basel) in central banking, climate change, etc. the renewal of the CMIM Precautionary Line

IMF and World Bank Russia-Ukraine war, conditions in the global (CMIM-PL), thereby enhancing the effective-
Group Meetings economy, food and energy crises, IMF
(April/October, and WB measures to support vulnerable
ness of the regional financial safety net.
Washington, D.C.) countries, etc. In addition, the Bank hosted the EMEAP
G20 Finance Ministers’ Governors’ Meeting and the Informal Meeting
Responding to global high inflation, the
and Central Bank of EMEAP Governors and Heads of Supervi-
global economic recovery, enhancing
Governors’ Meetings
cross-border payments, improving financial sory Authorities in Seoul, and participated in
(February, video
inclusion, crypto assets and CBDCs,
conferences; April, a meeting of SEACEN central bank governors,
responding to climate change, Debt Service
Washington D.C.;
Suspension Initiative (DSSI) for low-income
July, Bali; October, in order to discuss the latest financial and eco-
countries, etc.
Washington D.C.)
nomic trends and to share the Bank’s opinion
Source: Bank of Korea on and experience with pending issues includ-
ing the spillover effects of monetary policy
Strengthening Regional Financial Coopera- normalization in major countries on regional
tion economies, risk factors, and future challenges
of the crypto-asset market, and the status of
The Bank of Korea actively participated in climate change response. Also, as a member
discussions of financial and economic issues institution of the Advisory Committee of the
at consultative bodies across the Asia-Pacif- SEACEN Executive Committee,109) the Bank
ic, including at the ASEAN+3, EMEAP, and engaged in making decisions about major is-
SEACEN meetings as well as various activities sues related to the operation of the SEACEN
of their affiliated working groups, to strength- Center.
108) The meeting is co-hosted each year by one country among the 10 ASEAN members and by one among Korea,
China, and Japan. The 2022 meeting was co-chaired by China and Cambodia and was hosted via video due to
the prolonged COVID-19 situation.
109) With the aim to support the reform of the organization and the wage structure, and to deliberate on the recruit-
ment of new personnel under the Executive Director of the SEACEN Centre, the committee is composed of the
central banks from Korea, Indonesia, Malaysia, Papua New Guinea, the Philippines, Thailand, and Sri Lanka.
nomic situation and monetary policy condi-
Table Ⅱ- 19. M
ain Themes of Asia-Pacific
Regional Forums (2022) tions. Additionally, he also participated as a
Forums Main Themes panelist in some of the sessions. In October,
Regional and global financial and he was invited to deliver a lecture at the Peter-
25th ASEAN+3 Finance Ministers
economic trends, measures to son Institute for International Economics on
and Central Bank Governors’
74 enhance financial cooperation
Meeting (May, video conferences) Korea’s monetary policy in the context of the
within the region, etc.
22nd Trilateral Finance Ministers National and global financial

acceleration of global monetary tightening.
and Central Bank Governors’ and economic trends, financial
Meeting (May, video conferences) cooperation within the region, etc.
Figure Ⅱ- 22. M
eeting with U.S. Treasury
Latest financial and economic
Secretary Janet L. Yellen
trends, the impact of monetary
27th EMEAP Governors’ Meeting
policy normalization in major
(August, Seoul)
countries on regional exchange
rates and capital flows, etc.
Potential weakening of financial
11th Informal Meeting of
institutions’ assets amid rising
EMEAP Governors and Heads of
interest rates and challenges
Supervisory Authorities (August,
facing central banks and
Seoul)
supervisory authorities, etc.
58th SEACEN Governors’
Global response to climate change,
Conference (December, Siem
etc.
Reap)
Expanding Global Engagement
The Bank of Korea created opportunities

for active engagement with prominent figures
and academia overseas to enhance the foun-
dation for global cooperation.
The Governor of the Bank of Korea met with
U.S. Treasury Secretary Janet L. Yellen during
her visit to Korea in July 2022 to discuss re-
cent developments in the global economy and
financial markets, as well as issues related to Expanding the Sharing of Policy Experiences
global policy coordination. Also, the Bank’s with Central Banks in Emerging Markets
employees engaged in a forum with Secretary
Yellen on the topic “Women in Economics.” The Bank of Korea passed on many of its
Meanwhile, the Governor attended the policy experiences related to the responsi-
Jackson Hole Economic Policy Symposium bilities of a central bank, such as research,
in August, where he actively participated in monetary policy, financial stability, and for-
discussions with central bank governors and eign exchange policy, to eight central banks in
notable academics from major countries on emerging and developing countries, with the
unconventional monetary policy, including aim of supporting their financial development,
forward guidance, as well as the latest eco- strengthening their policy capabilities, and
enhancing friendly cooperation with those
Table Ⅱ- 20. BOK-Knowledge Partnership
central banks. Program (KPP) (2022)
First, the Bank’s Knowledge Partnership Country Main Topic
Program (KPP)110) resumed in-person opera- Cambodia Developing a Systemic Risk Monitoring Process
tions with the aim to return to the pre-pan- Strengthening the Capacity of Macroeconomic Analysis
Vietnam
and Forecasting for Monetary Policy Implementation 75
demic level of activities. By employing a hy-
Private Sector Credit Growth and its Impact upon Real
brid approach that combines both face-to-face Nepal
Sector in the Nepalese Economy

and non-face-to-face methods, the program Mongolia Enhancing Corporate Governance
enabled a more effective transfer of the Bank’s FX Transaction Monitoring and Market Stabilization
Sri Lanka
Measures
policy experience and business knowledge
Uzbekistan Financial stability in Uzbekistan
through active communication. In addition,
Kazakhstan Improving the System of Analysis and Forecasting
the Bank made efforts to achieve spillover
Dynamic Stochastic General Equilibrium Model for
effects and to assist in the establishment of Kyrgyzstan
Kyrgyz Republic
the necessary groundwork so that Korean Source: Bank of Korea
financial institutions and companies could

enter partner-country local markets. This

was accomplished by holding meetings with In addition, the Central Banking Study Pro-
high-level officials from partner central banks, gram (CBSP) was conducted in both non-face-
such as governors, deputy governors, and to-face and face-to-face formats in response
members of the monetary policy boards, as to changes in the COVID-19 situation. This
well as by inviting relevant local institutions program aims to share the Bank’s experienc-
to attend KPP seminars. This contributed to es in four fields -- foreign exchange reserves
elevating the Bank’s external status and rein- management, payments & settlements, inter-
forcing practical partnerships based on active nal audits & management, and financial sta-
exchanges with central banks in partner na- bility -- with employees of central banks from
tions. developing countries. Attendees this year
In order to raise the quality of our program included 150 employees from 21 countries, in-
output, the execution period of the KPP pro- dicating broader participation in the program.
gram was adjusted so that the program was
carried out from June to February of the next Expansion of Subscriptions to International
year. In addition, the policy dialogue channels Financial Institutions
with high-level officials of partner countries
were fortified by increasing the number of se- In 2022, the Bank of Korea paid a total of
nior advisors invited from five to six. 290 million dollars at the government’s re-
quest for subscriptions and contributions to
international financial institutions and con-
sultative bodies in accordance with the Act on
the Measures for the Admission to Interna-
110) The BOK-KPP is a policy advisory and technical support program designed to share the Bank of Korea's knowl-
edge, policy implementation experiences, and Korea’s experiences in developing its own financial system and
infrastructure, with central banks from emerging markets and developing countries.
Table Ⅱ- 21. Central Banking Study Program Table Ⅱ- 22. Subscriptions & Contributions to
(CBSP) (2022) International Financial Institutions
(year-end)
Numbers of
Issues and Dates (million USD)
Participants
2021 (A) 2022 (B) Change(B-A)
1st CBSP (foreign exchange reserves management, 44 persons from
March 28-30) 8 countries Subscriptions 16,493 16,741 248
76
76 persons from IMF 11,861 11,861 0
2nd CBSP (payments and settlements, June 20-22)
16 countries
IBRD 335 359 24
3rd CBSP (internal audits and management, August 11 persons from
29-September 2) 6 countries IDA 2,296 2,448 151
19 persons from ADB 293 293 0
4th CBSP (financial stability, October 18-21)
10 countries AfDB·AfDF 577 613 36
Note: Key issues and dates are in parentheses. The third and fourth AIIB 748 748 0
courses were held in person.
CABEI 96 101 6
Other 288 319 31
tional Financial Institutions. Specifically, the Contributions 1,006 1,048 42
reasons behind this increase in subscriptions IMF 79 121 42

IBRD 34 34 0
and contributions in 2022 included a sub-
ADB·ADF 671 671 0
scription to the 19th Replenishment of the
IDB·MIF 161 161 0
International Development Association (IDA),
IIC 40 40 0
a subscription related to the new accession
Other 21 21 0
to the Central American Bank for Economic
Total 17,499 17,789 290
Integration (CABEI), a subscription to the
replenishment of the African Development
Fund (AfDF), and a contribution to the IMF’s
debt relief for Sudan. As a result, the Bank’s Meanwhile, as of year-end 2022, the Bank’s
subscriptions and contributions to interna- total loans to the IMF amounted to 850 mil-
tional financial institutions totaled 17.8 billion lion SDRs. These loans included 30 million
dollars as of the end of 2022. SDRs in lending through the New Arrange-
ments to Borrow (NAB), and loans of 820 mil-
lion SDRs through the borrowing agreement
of the Poverty Reduction and Growth Trust
(PRGT).111) In 2022, the total amount of loans
outstanding decreased by 53 million SDRs
from the previous year, in line with the loan
decrease of 47 million SDRs through the NAB
and 6 million SDRs through the PRGT.
111) This is an agreement between the IMF and individual countries that is designed to arrange concessional financial
support for Low Income Countries (LICs). Korea signed the agreement in 2011 and made its first loan to this fund
in 2013.
Table Ⅱ- 23. Loans to IMF (year-end)
(million SDR)
2021 In 2022 2021 Change

(A) Loan (B) Repayment (C) (D=A+B-C) (D-A)
NAB 79 0 47 32 -47
77
PRGT 825 0 6 819 -6
Total 903 0 53 851 -53

QR BOX
QR 1
Bank of Korea Online
Review System for
Foreign Exchange
Transactions
7. Research and Statistics possibility of production disruptions in the
eurozone due to Russia’s discontinuation of
gas supplies and the resulting risk factors
A. Research Activities for domestic industries.114) Also, in addition
to the Russia-Ukraine war, it analyzed the
78
The Bank of Korea conducts extensive impact of supply disruptions on domestic
research to support the establishment and industries as global supply chain disrup-
enforcement of effective monetary and credit tions intensified in the aftermath of China's
policies. These efforts span a wide range of lockdown measures under its zero-COVID
topics covering all aspects of the domestic and policy.115) Meanwhile, interest rate hikes in
international economy, including the global the United States and Europe have been ac-
economic landscape, growth, inflation, and celerating in response to high inflation and
employment, while the findings of such re- concerns over an economic slowdown have
search are published as various reports and grown due to the energy supply insecurity
papers. 112)
caused by the Russia-Ukraine war. In light of
such factors, the Bank compared the risks of
(1) Head Office Research Activities a recession in these countries to those of the
past hard landing period and speculated the
Analyzing Key Pending Issues in the Korean spillover effects on the domestic economy if a
Economy recession becomes a reality.116)
Meanwhile, high inflation persisted domes-
In 2022, the main focus of the Bank’s tically, prompting the Bank to strengthen its
research on economic issues was to ana- analysis of high inflation issues in Korea and
lyze the impact on the domestic and glob- related risks. It analyzed in detail the wide-
al economies and future risks of changes spread proliferation of inflationary pressure
in the external environment, such as the caused by supply-side factors such as rising
Russia-Ukraine war, China's zero-COVID commodity prices amid high demand-side
policy, and the acceleration of global mone- pressure in the process of recovery from the
tary restraints in response to high inflation. shocks of COVID-19 and predicted future in-
The Bank analyzed the negative impact of flationary trends.117) In addition, it closely ex-
the Russia-Ukraine war on the European amined the trend of international food prices,
economy and its spillover effects on Korea's which have risen sharply since the outbreak
exports to Europe 113)
and then examined the of the Russia-Ukraine war, and investigated
112) Reports and papers in the footnotes can be found in Research Papers on the Bank of Korea website. Some are
only available in Korean.
113) The Impact of the Russia-Ukraine war on the EU Economy and Korea-EU Trade (International Economic Review,
May 2022).
114) Review of the Risks of EU Production Disruptions Caused by the Discontinuation of Russian Gas Supplies and the
Domestic Industries (BOK Issue Note, September 2022).
115) Characteristics of Recent Global Supply Chain Disruptions and Their Impact on Domestic Industries (BOK Issue
Note, July 2022).
116) Assessment of Recession Risks in the US and Europe and Their Implications (BOK Issue Note, September 2022).
117) Assessment of the Spreading Trend of Inflationary Pressures (BOK Issue Note, February 2022).
118) Recent Agflation Issues and Implications (BOK Issue Note, June 2022).
its impact on domestic prices.118) Furthermore, in employment after the pandemic, the Bank
the Bank examined the main inflation drivers also placed significant emphasis on the anal-
that determine inflation dynamics to assess ysis of the current issues in the employment
the sustainability of the current high infla- market. It examined recent trends in the labor
tion,119)
while taking an in-depth review of the force participation rate since the outbreak
79
demand-side drivers through an analysis of of COVID-19 and analyzed the influential
the characteristics and prediction of the future factors behind differences compared to past

evolution of the core prices trend. 120)
It also an- crises,125) as well as assessed the wage growth
alyzed the interaction between inflation and pressure in the labor market by decomposing
wages, in which soaring prices prompt rapid wage growth factors and analyzing the pass-
wage growth. 121)
through effect between wages and prices.126)
In light of the tightened domestic mone- Then, it calculated an employment quality
tary policy in response to high inflation, the index to evaluate the level of recovery in the
Bank strengthened its analysis of the impact employment market in the post-pandemic
of rising interest rates on the domestic econ- period on qualitative terms rather than quan-
omy. It quantitatively analyzed the impact titative.127) In addition, it assessed the growth
7. Research and Statistics

of rising interest rates by sector of domestic of the number of employed persons from
consumption.122) Then, it assessed the impact the perspective of labor supply and demand
of the interest rate hikes on housing prices and studied the characteristics of the recent
by examining the conditions and risk factors employment situation among the young and
in the housing market, in response to the elderly.128)
downturn in housing prices, which had risen In addition, the Bank conducted a multifac-
sharply since the COVID-19 pandemic, and eted review of recent changes in the economic
sluggish house transactions. 123)
In addition, in environment and structural issues such as the
order to examine the risk posed by the burden low birthrate and population aging, climate
of principal and interest repayments caused change, and new growth engines, and pro-
by the accumulated household debts to date, it posed medium-to-long-term policy measures.
estimated the level of interest rate sensitivity It analyzed the impact of population aging
of household lending using microdata while on the overall lifecycle consumption of eco-
considering various factors affecting lending nomic agents and estimated the impact of the
rates. 124)
future advancement of population aging on
Meanwhile, given the significant changes consumption through a hypothetical experi-
119) Review of the Sustainability of the Current High Inflation (BOK Issue Note, September 2022).
120) Review of the Flows of the Core Prices (BOK Issue Note, December 2022).
121) Review of the Price-Wage Relationship in Korea (BOK Issue Note, July 2022).
122) Review of the Impact of Rising Interest Rate by Sector of Domestic Consumption (BOK Issue Note, July 2022).
123) Assessment of Housing Market Risks (BOK Issue Note, August 2022).
124) Sensitivity of Household Debt to Interest Rates (Monthly Statistical Bulletin, September 2022).
125) Analyzing the Influential Factors of the Labor Force Participation Rate Since the COVID-19 Outbreak: A Cross-Cri-
sis Comparison (BOK Issue Note, January 2022).
126) Assessment of the Recent Wage Pressure in the Labor Market and Its Implications (BOK Issue Note, April 2022).
127) Assessment of the Quality of Employment in Korea (BOK Issue Note, June 2022).
128) Assessment of the Recent Increase in the Number of the Employed (BOK Issue Note, August 2022).
ment.129) It also examined the routes through in-depth research into major economic issues,
which climate change impacts productivity such as monetary policy132) and the labor mar-
and derived policy implications for enhancing ket.133) It also provided policy references to im-
productivity in the era of climate change.130) In prove the nation’s economic structure in the
addition, the Bank compared the global com- medium-to-long-term by actively conducting
80
petitiveness of domestic new growth indus- research into major issues related to the open
tries with those of major countries in terms of economy,134) including exchange rates, capi-
market share and marketability and assessed tal movements, and global value chains, and
potential risk factors. 131)
timely issues related to the digital economy,
Generation MZ, and income inequality.135)
Strengthening Research by the Economic In addition, the Institute steadily published
Research Institute the results of its academic and theoretical
research,136) while continuously carrying out
The Economic Research Institute conducted research into North Korea’s economy.137)
in-depth research into pending economic is- In particular, in 2022, the Institute conduct-
sues at home and abroad, as well as medium- ed intensive research on central bank digital
to-long-term research and investigations. currencies (CBDCs) and actively sought to
The Institute published the findings of its externally disseminate the research findings.
129) Life-cycle Consumption in an Aging Economy: The Case of Korea (Monthly Statistical Bulletin, February 2022).
130) The Impact of Climate Change on Productivity (BOK Issue Note, January 2022).
131) Global Competitiveness and Risks to Korea’s New Economy Industries (Monthly Statistical Bulletin, March 2022).
132) Measuring the Effects of LTV and DTI Limits (BOK Working Paper, January 2022), Optimal Monetary Policy under
Heterogeneous Consumption Baskets (BOK Working Paper, November 2022), and Cross-Country Differences in
the Effects of Monetary Policy Shocks on Outputs and Prices and Their Determinants (BOK Working Paper, De-
cember 2022).
133) Immigration and Natives’ Task Specialization (BOK Working Paper, January 2022), Housing Wealth, Labor Supply,
and Retirement Behavior (BOK Working Paper, February 2022), Technological Change, Job Characteristics, and
Employment of Elderly Workers (BOK Working Paper, September 2022), Field-of-study Mismatch and the Long-
term Wage Effects of Graduating During a Recession (Economic Analysis, September 2022).
134) E xchange Rate Regime and Optimal Policy (BOK Working Paper, March 2022), Transmission of Global Financial
Shocks: Which Capital Flows Matter? (BOK Working Paper, January 2022), Selection into Outsourcing versus In-
tegration Strategies for Heterogeneous Multinationals (BOK Working Paper, August 2022).
135) T he Relationship Between the Digital Economy and Market Monopolies (BOK Issue Note, January 2022), The
State and Characteristics of Generation MZ (BOK Issue Note, March 2022), Demand Shocks vs. Supply Shocks:
Which Shocks Matter More in Income and Price Inequality? (BOK Working Paper, February 2022).
136) A Counterfactual Method for Demographic Changes in Overlapping Generations Models (BOK Working Paper,
January 2022), Financial Literacy and Mutual Fund Retail Investing (BOK Working Paper, February 2022), Fixed
Effects Quantile Estimations with Extended Within Transformation and their Application (BOK Working Paper, No-
vember 2022), A Causal Analysis of Changes in Korean Household Consumption after the Global Financial Crisis
(BOK Working Paper, November 2022).
137) Background and Implications of North Korea’s Issuance of “Central Bank Notes” (BOK Issue Note, March 2022),
Estimating Export and Import Unit Value Index in North Korea: Using Sino-North Korean Trade Data (BOK Work-
ing Paper, April 2022), Survey and Analysis of North Korean Consumer Payment Instruments (BOK Working
Paper, August 2022), A Study on North Korea’s Economic System: Actual Conditions & Evaluation (Economic
Analysis, September 2022), North Korea's Economy in the Last Five Years (2017-2021) and Future Prospects (BOK
Issue Note, September 2022).
Based on the findings,138) it held a symposium demic.
on CBDC policy research139) and published the In March, the 14th BOK-BIS Asian Research
results in a special issue of the BOK periodical Network Workshop was held via videocon-
Economic Analysis. 140)
ferencing. In June, the Bank of Korea Interna-
tional Conference, which had been suspended
Expanding the Global Research Network 81
since the outbreak of COVID-19, was held in a
and Exchanges hybrid format combining in-person and non-

face-to-face sessions under the theme “The
The Bank of Korea devoted continued ef- Changing Role of Central Banks: What Can
forts to strengthen its global research network We Do and What Should We Do?”141) The
through in-person meetings and non-face- conference was attended by distinguished
to-face conferences amid the COVID-19 pan- scholars from academia and international
Figure Ⅱ- 23. Bank of Korea International Conference 2022 (June 2-3, 2022, Seoul)
138) Central Bank Digital Currency and Privacy: A Randomized Survey Experiment (BOK Working Paper, August 2022)
and many others.
139) The symposium was jointly hosted by the Bank of Korea Economic Research Institute, Korea Institute of Finance,
and Seoul National University Institute for Research in Finance and Economics (October 2022).
140) Four academic studies were published in a special issue of Economic Analysis (Vol. 28, No. 4), including Essential
Roles of CBDC in the Payment System, Central Bank Digital Currency and the Transmission Channel of Monetary
Policy, Effects of the Introduction of Central Bank Digital Currency on Banking Industry and Macroeconomic, and
CBDC and Card Payment Market.
141) For detailed information, visit the Bank of Korea International Conference website and the Bank of Korea YouTube
channel.
organizations,142) who presented their papers
and engaged in lively discussions on the vari- In an attempt to adapt to the new financial
ous roles required of central banks. economic environment, the Bank of Korea
In the second half of 2022, as the pandemic endeavored to improve its research system
subsided, the Bank was able to resume face- and efficiently conduct collaborative research
82
to-face meetings. It co-hosted the 2022 Annu- activities involving outsourced research ser-
al Meeting of the CEBRA in August and the vices and different departments within the
KAFA session at the 2022 FMA Annual Meet- organization. To this end, the Bank convened
ing with the Korea America Finance Associa- four Research Committee meetings144) during
tion in October. In November, it co-organized the year to coordinate its overall research ac-
the 2022 BOK-KEA International Conference tivities, monitoring the progress of ongoing
with the Korea Economic Association. By outsourced research activities, domestic and
hosting these meetings, the Bank provided overseas joint research, and cross-departmen-
opportunities for high-quality speeches and tal collaborative research, as well as actively
discussions about the latest economic theories exploring key research topics.
and expanded its exchanges with research In addition, the Bank strived to enhance the
institutes and academia at home and abroad. quality of its research and the efficiency of col-
In December, the Bank hosted the BOK-BOJ laborative research projects by strengthening
Research Workshop 143)
via videoconferencing, research ethics and improving the methods
where presentations and discussions took for data construction and inter-departmental
place across a diverse range of topics, facilitat- data sharing. Going forward, it will further
ing the sharing of research achievements and promote collaborative research efforts among
knowledge between the two central banks. In departments to advance the quality of re-
particular, the BIS was added to the presenter search data.
list in 2022.
The Bank also actively conducted joint (2) R
esearch Activities by Regional
studies with renowned scholars at home and Branches
abroad. Such joint research activities improved
the Bank's research capacity to address do- The functions of the Bank of Korea's region-
mestic and international economic issues and al branches include monitoring the condition
strengthened its global research network. of regional finance sectors and economies,
Boosting Internal Joint Research Activities compiling a diverse range of statistics about
142) Keynote speeches were delivered by Robert M. Townsend, Professor at the Massachusetts Institute of Technol-
ogy, and Hyun Song Shin, Economic Advisor and Head of Research at the BIS. Attendees included distinguished
scholars including Thomas J. Sargent, Professor at New York University, Markus K. Brunnermeier, Professor at
Princeton University, Jonathan Ostry, Professor at Georgetown University, Laurence M. Ball, Professor at Johns
Hopkins University, Atif Mian, Professor at Princeton University, and Todd Keister, Professor at Rutgers University,
and figures from central banks such as Martin Bodenstein, Chief of Board of Governors of the Federal Reserve
System, Sevim Kosem, Senior Economist at the Bank of England, Makoto Nakajima, Economic Advisor and Econ-
omist at the FRB of Philadelphia, and David Andolfatto, Senior Vice President at the FRB of St. Louis.
143) The Bank has held joint research workshops with the Institute for Monetary and Economic Studies at the Bank of
Japan on an annual basis since 2017, alternating the role of host.
144) The Research Committee consists of the chairperson (the Deputy Governor of the BOK Economic Research In-
stitute) and five committee members (four Deputy Governors of the Bank of Korea and the Director General of the
Economic Research Institute).
regional economies, and analyzing key report and provided them to local communities.
gional economic issues. In addition to helping In addition, the branches regularly com-
regional economies achieve steady growth, all piled and provided various statistics essential
of these functions are required by the Head for identifying regional economic trends and
Office for the establishment of national mon- developing local government policies, such as
83
etary and credit policies, as well as the pursuit the Business Survey Index (BSI), the Consum-
of financial stability. The regional branches er Survey Index (CSI), lending and deposit

also help their respective local communities trends at financial institutions, and corporate
to develop policy tasks and establish policy financial statement analyses. In November,
measures by co-hosting seminars and forums the Bank also signed a memorandum of un-
about current issues in the local communities derstanding with NH Nonghyup Card to
with relevant local organizations, universities, secure more various basic data sets for the big
and local governments. data analysis of regional economies.
Enhancing the Monitoring of Regional Econ- Analyzing Major Issues in the Regional
omies Economies

The Bank's regional branches conducted The Bank’s regional branches faithfully per-
in-depth monitoring of regional economies formed their duties as regional think tanks by
through surveys of local businesses and rele- analyzing the impact of changes in local eco-
vant institutions and published the quarterly nomic conditions and suggesting policy mea-
Regional Economic Report that comprehen- sures for the sustainable and stable growth
sively analyzes the monitoring results, provid- of the regional economies through in-depth
ing information necessary for the Head Office studies into current issues within their region.
to identify regional economic trends and In 2022, each regional branch provided their
implement its monetary and credit policies. In respective local community with information
addition, they conducted regular or occasional about pending regional issues such as the
monitoring of key industries such as semi- main characteristics of ICT industry growth
conductors and automobiles and delivered the and its impact on the regional economy,145) the
monitoring results to relevant departments at impact of carbon emission reduction policies
the Head Office to contribute to policy devel- on regional industries,146) and the main char-
opment. Furthermore, they compiled the anal- acteristics of self-employed businesses in the
ysis and monitoring results on other major region and their trends after COVID-19.147)148)
issues related to regional economies into the In particular, in December, three regional
Issue Analysis, Issue Monitoring, and Field branches and the Regional Economy Division
Report sections of the Regional Economic Re- of the Head Office Research Department col-
145) Key Features of ICT Industry Growth and Its Impact on Gyeonggi's Regional Economy (Gyeonggi Branch, January
2022).
146) Impact of the Carbon Emission Reduction Policy on Industries in Chungnam and Resulting Challenges (Daejeon,
Sejong, and Chungnam Branch, January 2022).
147) Key Characteristics and Post-Covid-19 Trends of Self-Employment Businesses in Busan and Ulsan (Busan
Branch, January 2022).
148) In 2022, the regional branches conducted 85 independent research projects, among which eight were joint re-
search projects carried out through collaboration among different regional branches.
laborated to create a report on the economic the paradigm shift in the post-pandemic era
impact of the steel production disruption and the response of the business community
caused by Typhoon Hinnamnor. 149)
in Ulsan, the prospect of the future energy
In addition, in order to meet various re- industries in Gyeongnam and ways to foster
search needs in the regions, the regional leading industries, and the development strat-
84
branches have created research reports in egy for the Gangwon economy in response
collaboration with external experts, on issues to the accelerating digital transformation.
such as regional economic disparity factors They also held regional economic forums156)
and revitalization measures,150) assessment of to identify regional economic issues and find
the soundness of household debts in Busan measures to revitalize the regional economy,
through the regime-switching model, 151)
ex- such as the impact of rising global commod-
pected effects of ESG management of SMEs ity prices on the manufacturing industries in
in Gangwon, 152)
and plans to build innovation Daegu and Gyeongbuk, the assessment of the
clusters for the battery material and next-gen- employment in Gwangju and Jeonnam and
eration energy sectors, centered on Pohang the direction of employment policies, and the
and Gyeongju. 153)154)
outlook for the tourism market in Gangwon
and Yeongdong, using the forums as venues
Strengthening Research Exchanges with Re- for sharing awareness and strengthening
gional Communities communication toward topics related to local
communities.
As the COVID-19 quarantine measures Moreover, the regional branches prepared
were eased, the regional branches actively policy reference materials about regional eco-
interacted with local governments, local orga- nomic trends, which were provided for local
nizations, and universities by holding several government meetings in a timely manner,
seminars and forums under the themes of thereby contributing to the development of
growth strategies for local economies and fos- response measures.
tering local flagship industries. Meanwhile, the regional branches operated
Specifically, they contributed to the es- a regional management system157) for areas
tablishment of strategies and policies for with no regional branch or ones that face
sustainable growth of the regional economy specific needs in conducting research, moni-
by holding seminars 155)
on issues including toring, and exchanges and cooperation as an
149) Examination of the Economic Impact of Steel Production Disruptions (BOK Issue Note, December 2022).
150) Research on Regional Economic Disparity Factors and Revitalization Measures - Focusing on the Role of Highly
Educated Workforce (Gwangju and Jeonnam Branch, October 2022).
151) Assessment of the Soundness of Household Debts in Busan and Analysis of the Spillover Effects through a Re-
gime-switching Model (Busan Branch, March 2022).
152) Analysis of the Expected Effects of ESG Management of SMEs in Gangwon and Recommendations for the Pro-
motion Direction (Gangwon Branch, December 2022).
153) Plans to Build Innovation Clusters in the Battery Material and Next-Generation Energy Sectors with Its Focus on
Pohang and Gyeongju (Pohang Branch, December 2022).
154) In 2022, the regional branches carried out 31 joint research projects with external experts.
155) In 2022, the regional branches held 17 seminars on regional economies.
156) In 2022, the regional branches hosted 34 regional economic forums.
157) As of year-end 2022, 12 regional branches were operating the regional management system for 15 areas.
administrative or economic center, aiming to statistics, such as currency, liquidity, interest
develop policy measures tailored to such ar- rates on deposits and loans, and household
eas. credit. The approved statistics also include
national accounts statistics ‑ Gross Domestic
(3) Research Activities at Overseas Rep- Product (GDP), Input-Output (I-O) Tables,
85
resentative Offices National Balance Sheet (B/S), Flow of Funds,
Balance of Payments (BOP), and International

The Bank of Korea’s overseas representative Investment Position (IIP) - as well as others
offices conducted research and trend anal- such as Producer Price Index (PPI), Export
yses158) on the economies of their respective and Import Price Indices (EPI and IPI), Finan-
jurisdictions while endeavoring to promptly cial Statement Analysis (FSA), Business Sur-
provide the Head Office with local infor- vey Index (BSI), and Consumer Survey Index
mation 159)
obtained through interviews with (CSI).160) The Bank also expanded upon exist-
central banks and international organizations ing statistics and promoted the development
in their host countries, as well as finance and of new statistics, as well as actively conduct-
economics experts. ed statistical cooperation with international

In 2022, the overseas offices produced de- organizations, academia, and governments.
tailed analyses of the various policy respons- In addition, it completed the reconstruction
es from central banks and governments in of the Economic Statistics System (ECOS) to
their host countries regarding major global improve the convenience of public access to
financial and economic issues, such as the statistics services by reorganizing the statis-
digital transformation and climate risks, as tical classification system and improving the
well as the structural changes and subsequent statistical search function.
economic spillover effects following the pro-
longed COVID-19 pandemic. Ensuring the Improvement and Expansion of
In addition, they strengthened external Statistics
cooperation and communication activities
through intensive exchanges with major In order to ensure that its statistics fully re-
institutions and secured stable information flect recent economic and social phenomena,
gathering channels to maintain a close rela- such as changes in the industrial structure,
tionship with relevant local organizations and advances in production technology, and the
collect information on key issues. rapid expansion of the digital environment,
the Bank of Korea developed short-term sta-
B. Compilation of Statistics tistical indicators and carried out sample reor-
ganization.
As a key agency for the compilation of na- The Bank conducted various studies to
tional statistics, the Bank of Korea generates expand short-term statistics using unstruc-
18 nationally-approved sets of statistics, in- tured large-volume data. It created the News
cluding traditional monetary and financial Sentiment Index,161) which indexes economic
158) In 2022, the overseas representative offices produced 98 research and trend analysis reports.
159) In 2022, the overseas representative offices produced 413 local information reports.
160) The Bank of Korea’s Economic Statistics System (ECOS).
sentiment identified in economics-related Statistical Cooperation
news articles and released daily and monthly
indicators through the ECOS from 2022 as The Bank of Korea has strengthened coop-
one of the Experimental Statistics. 162)
It is also eration with academia and related institutions
conducting studies on methods to calculate and participated in major international con-
86
the price index using scanner-type data. ferences to discuss various issues.
The Bank reorganized the CSI sample to The Bank hosted the Korean Statistical So-
reflect changes in the demographic structure ciety-BOK Joint Forum in an online/offline
to improve the statistics' accuracy and reliabil- hybrid format.164) The forum, attended by 170
ity. In addition, it is also in the process of the statisticians from academia and related insti-
2020 Benchmark Revision of Korean National tutions, explored the latest statistical method-
Accounts and created the 2010-2015 linked ologies for analyzing financial economic data
input-output tables to enable time series com- and discussed the use of big data for economic
parisons between each benchmark year. analysis and forecast under the theme of “Data
Meanwhile, it has also actively participat- Economy and Statistics in the Digital Age.”
ed from the planning stage in the New Data In addition, the Bank continued to maintain
Gaps Initiative (New DGI), 163)
which was its cooperative relationship with Statistics
launched in 2022 as part of efforts to expand Korea by holding the half-yearly Statistics
international statistics and will continue to Cooperation Meeting, while participating in
cooperate for the successful implementation international meetings and conferences host-
of the New DGI by promoting the creation of ed by major international organizations and
statistics for household distribution accounts discussing key issues related to the successful
and green bond issuance and holdings. establishment and implementation of new in-
ternational standards for statistics.
Strengthening of Domestic and International Improving Economic Statistics Services
161) The News Sentiment Index categorizes and indexes the sentiments identified in economics-related news articles
into positive, negative, and neutral, and has the advantage of high correlation with the Consumer Composite Sen-
timent Index, in addition to greater expediency. However, it should be noted that given the nature of the high-fre-
quency index, volatility, or “noise” is relatively higher than other macroeconomic indicators that are compiled on a
monthly or quarterly basis.
162) E xperimental Statistics is a system introduced by Statistics Korea in September 2021 to promote the creation and
utilization of statistics that apply different data or methodologies from existing statistics, such as big data, but re-
quire observation to improve quality. The News Sentiment Index is registered as Experimental Statistics No. 2022-
001.
163) The Data Gaps Initiative, launched at the 2009 G20 summit in London, refers to an international statistics devel-
opment and improvement project led by major international organizations, including the BIS and the ECB, as well
as G20 members, under the leadership of the IMF and the FSB. The first phase of the Data Gap Initiative (DGI-1),
concerning CDS, structuralization, and non-bank financial institutions’ cross-border exposure, was carried out
from 2010 to 2015. The second phase (DGI-2), covering derivative products, overseas direct investment, and the
sharing of statistics, was conducted from 2016 to 2021. The New DGIs (climate change, household sector distri-
butional statistics, fintech, financial inclusion, and access to private and administrative data) began in 2022 and
will be carried out by 2027.
164) The video recording of the forum is available on the Bank of Korea's YouTube channel.
and automation, as well as improving the effi-
Over the year, the Bank of Korea provided ciency of data collection by establishing a sta-
a total of 48 “Lectures on Economic Statistics tistical data acquisition system. It also bettered
Indexes” at universities and public institutions user convenience by reorganizing the statisti-
to enhance public understanding of economic cal classification categories and improving the
87
statistics. As social distancing was lifted in the screen designs and statistics search functions.
second half of 2022, the lectures shifted away

from online formats and toward in-person
sessions.
In addition, by completing the Econom-
ic Statistics System (ECOS) reconstruction
project in May 2022,165) which began in April
2020, the Bank expanded the scope of the
system-based compilation of statistics and
enhanced work productivity by strengthening
functions of data processing, visualization,

Figure Ⅱ- 24. Korean Statistical Society-BOK Joint Forum (September 16, 2022)
165) For detailed information, see Box II-2. Overhauling of Bank of Korea’s Economic Statistics System (ECOS).
and producer prices were redeveloped, and
Box Ⅱ-2. additional functions were implemented for com-

piling statistics on the international balance of
payments, money circulation, and financial in-
Overhauling of Bank of Korea’s Eco- stitutions’ weighted-average interest rates, with
88 the aim to enhance the efficiency of statistics
nomic Statistics System (ECOS)
creation.
The Bank of Korea has overhauled the Eco- Going forward, the Bank of Korea will use the
nomic Statistics System (ECOS), which has reconstructed ECOS to respond to changes in
been providing services to the public since 2004 the economic and IT environment and fulfill vari-
and officially resumed its operation on May 30, ous statistical needs.
2022. The reconstruction of the ECOS aimed to
improve the productivity and efficiency of statis-
Figure Ⅱ- 25. User Portal’s Main and Statistics
tics compilation work, provide better statistical Search Screens
inquiry functions for users, and strengthen data
User Portal
management.
The statistical classification categories were
revised to make it easier for external users to
search for statistics, while the screen designs
and search functions were also improved. The
main categories for statistics were simplified by
decreasing their number from 18 to 9, and the
number of categories and subcategories was
also adjusted to shorten the users’ navigation
process to the desired statistics. The efficiency
of the statistics search function was improved,
and the retrieval of repeatedly-used statistics
was made easier to allow users to reuse lists of Statistics Search
statistics that they viewed previously. In addition,
functions to add user convenience in creating
statistical tables and reports were provided such
as a function of visualizing statistics data by us-
ing data analyzing tools.
In terms of the system, efficiency was en-
hanced across all statistical production process-
es, from collecting to compiling and publishing
the Bank’s basic data. New technologies were
fully utilized to enhance the computerization of
statistical works and strengthen the systems
for processing and error verification of basic
data. Existing monetary and financial statistics
QR BOX
QR 1 QR 2
Website of Bank of Korea Website of Bank of Korea 89
Research Papers International Conference
2022

QR 3 QR 4
Video Recording of Bank ECOS Website
of Korea International
Conference 2022

QR 5
Video Recording of
Korean Statistical
Society-BOK Joint Forum
8. Treasury and Securities deposited in the Bank amounted to 2,240 tril-
Business lion won.
Most pay ments of Treasur y f unds are
conducted via real-time electronic transfers
A. Treasury through the Treasury Network. Upon receiv-
90
ing a request from a designated official to
The Bank of Korea, as the bank of the gov- transfer Treasury funds, the Bank disburses
ernment, is tasked with the management them into the creditor’s accounts through fi-
of the receipt and disbursement of Treasury nancial institutions on a real-time basis. The
funds and extends credit to the government. Bank also makes payments for the operation
Thus, the Bank holds Treasury funds, such as of idle funds and for the redemption of Trea-
national taxes, as Government Deposits, dis- sury bonds from its current account. In 2022,
burses funds from this account based on the the total disbursement of Treasury funds
government’s needs, and provides temporary stood at 2,826 trillion won.
loans to the government when the govern-
ment faces a fiscal shortage. In addition, these
Table Ⅱ- 24. Receipts & Disbursements of
transactions are accounted in accordance with Treasury Funds
(trillion won)
the government accounting system166) and
2020 2021(A) 2022(B) Change(B-A)
verified against government data. In order to
Total Receipts 2,077 2,650 2,836 186
ensure the effective processing of Treasury
Receipts Through
funds, the Bank of Korea has also established 448 517 595 78
Treasury Agencies
and currently operates the Treasury Network. Receipts Through
1,629 2,133 2,240 107
Bank of Korea1)
Total Disbursement1) 2,071 2,625 2,826 201
Receipt and Disbursement of Treasury
Note: 1) Includes collection and operation of idle funds, issuance
and redemption of Treasury bonds, and transfers between
Receipts from taxes and other government government accounts.

revenues are processed by the Bank of Korea,
treasury agencies, the Post Office, and other Current Status of Treasury Agencies
agencies 167)
designated for such purposes.
Whereas treasury agencies deposit receipts To improve convenience for taxpayers, the
from general taxpayers, the Bank deposits the Bank of Korea designates branches of finan-
government’s idle funds operated by financial cial institutions that meet certain require-
institutions and funds from the issuance of ments as treasury agencies to be entrusted
Treasury bonds. In 2022, national treasury with the business of receiving taxes and other
receipts through all national treasury agencies government revenues. Depending on the type
totaled 595 trillion won, while receipts directly of contract, treasury agencies can be classi-
166) In Korea, the government accounting system is divided into a cash basis, which records income and expenses
according to cash flow under the National Finance Act, and an accrual accounting basis, which records transac-
tions using double entry book keeping as they occur under the National Accounting Act. The Bank of Korea han-
dles cash basis accounting only.
167) Since 2008, the Korea Financial Telecommunications and Clearings Institute (KFTC) has been designated as the
agency with the authority to receive Treasury funds through credit cards.
fied as Type A, which are designated directly jority of Treasury fund payments via real-time
by the Bank of Korea, and Type B, which are electronic transfers through the Treasury Net-
designated indirectly as agencies by their fed- work, which facilitates the rapid operation of
erations. 168)
As of the end of 2022, there were fiscal funds. This is further improved by han-
16,539 treasury agencies, down by 293 from dling a massive volume of data, for example,
91
the previous year-end. National treasury re- regarding the receipt of Treasury funds and
ceipts via treasury agencies totaled 563 trillion national tax refunds, through a batch process

won, up by 71 trillion won. at a fixed time once per day.
With the aim of heightening the stability
of its treasury business operations managed
Table Ⅱ- 25. Status of Treasury Agencies1) &
Receipts Value through the Treasury Network, the Bank
(number, trillion won) conducts annual simulation-based training
2021(A) 2022(B) Change(B-A) programs. In particular, it examines whether
Treasury
6,292(22) 5,940(22) -352 organizations included in the Treasury Net-
Agencies Type A
Number Treasury work are able to operate the treasury business
10,540( 7) 10,599( 7) 59
Agencies Type B through alternative means, such as via e-mail
8. Treasury and Securities Business

Total 16,832(23) 16,539(23) -293 or the Disaster Recovery Center,169) in the
Treasury
Agencies Type A
469 539 70 event of a failure of their computer systems.
Receipts Treasury There were a total of 482,000 cases per day
Value 23 24 1
Agencies Type B of receipts and disbursements of Treasury
Total 492 563 71 funds through the Treasury Network in 2022,
Notes: 1) Figures in parentheses are numbers of institutions.
amounting to a total of 25.4 trillion won in
monetary value and increasing in the number
Operation of the Treasury Network of cases and value by 8.7 percent and 16.3 per-
cent, respectively, over the previous year.
In order to carry out tasks related to Trea-
sury funds, the Bank has established and
operated the Treasury Network since 2003,
which links the Bank of Korea’s computer
systems with the government’s Digital Bud-
get and Accounting System (dBrain), and the
computer systems of financial institutions and
the Korea Financial Telecommunications and
Clearings Institute (KFTC). The Bank enhanc-
es the system’s efficiency by making the ma-
168) Type A includes branches of banks while Type B applies to member cooperatives of the National Agricultural Co-
operative Federation (Nonghyup), the National Federation of Fisheries Cooperatives (Suhyup), the National Forest-
ry Cooperative Federation, branches of the National Credit Union Federation (Shinhyup), MG Community Credit
Cooperatives, mutual savings banks, and Kakao Bank.
169) This is a backup computer system to handle Treasury business operations in the event of emergencies that lead
to failures in the main systems.
In 2022, the Bank provided 1.8 trillion won
Table Ⅱ- 26. Treasury Network Transactions
(daily average) in temporary loans to the government on
(thousand occurrences, trillion won, %) an average basis, up by 1.6 trillion won from
2021 2022 Change (%) 2021. On a cumulative basis, loans to the gov-
Real-time Electronic
48.2 43.4 -9.9 ernment increased by 26.6 trillion won from
Transfers
92
File Transfers 395.3 438.5 10.9 7.6 trillion won to 34.2 trillion won.
(Treasury
Number 327.2 364.1 11.3 Figure Ⅱ- 26. Loans to Government
Receipts)
(National Tax
68.2 74.4 9.1 Average Balance (left) Total (right)
refunds)
(trillion won) (trillion won)
Total 443.5 481.9 8.7
10 120
Real-time Electronic
19.4 22.6 16.2 9 102.9
Transfers 100
8
File Transfers 2.4 2.8 17.4
7
(Treasury 80
Value 2.1 2.4 16.4 6
Receipts) 5.1
5 60
(National Tax
0.3 0.4 23.1
Refunds) 4
2.9 36.5 34.2 40
Total 21.8 25.4 16.3 3
2 1.8
Source: Bank of Korea 1.1 20
1 7.6
1.0 0.2
0 0
2018 2019 2020 2021 2022
Temporary Loans to the Government
Based on resolutions of the Monetary Policy

Board, the Bank of Korea sets and manages a
ceiling on its credit extended to the govern- B. Securities
ment. The ceiling for 2022 was 50 trillion won,
unchanged from the previous year. To facilitate the effective operation of its
monetary and credit policies, the Bank of Ko-
rea issues Monetary Stabilization Bonds and
Table Ⅱ- 27. Ceilings on Loans to Government
buys, sells, and lends government and agency
(billion won)
bonds. The Bank is also entrusted by the gov-
2021(A) 2022(B) Change (B-A)
ernment with the authority to issue, redeem,
Treasury Single
40,000 40,000 -
Account and register Treasury bonds and bills.
Public Capital In 2022, a total of 168.6 trillion won worth
8,000 8,000 -
Management Fund
of Korea Treasury Bonds (KTBs)170) was issued
Special Account for
2,000 2,000 -
Grain Management through competitive auction, and 74.8 tril-
Total 50,000 50,000 - lion won’s worth was redeemed. As a result,
Source: Bank of Korea the value of KTBs in circulation totaled 937.5
trillion won as of year-end 2022. With regard
to Korea Treasury Bills,171) a total value of 16.3
170) Korea Treasury Bonds (KTBs) are government bonds issued for the purpose of the receipt or disbursement of
medium- and long-term government funds.
171) Korea Treasury Bills are short-term bonds that the government issues to secure financing from the market and to
compensate for temporary shortages caused by seasonal factors throughout the fiscal year.
trillion won was issued through competitive Meanwhile, like many central banks in ma-
bidding in 2022, the full amount of which was jor countries,172) the Bank of Korea provides
redeemed by the end of the year. securities custody services in order to support
investment in Korean bonds by foreign central
banks and international financial institutions.
Table Ⅱ- 28. Issuance & Redemption of Korea
93
Treasury Bonds As of the end of 2022, the Bank entered into
(trillion won) securities custody agreements with six foreign

End of 2021 2022 End of 2022 central banks and one international finan-
Outstanding Issuance Redemption Outstanding cial institution for Treasury bonds and MSBs
Korea
Treasury
amounting to 41.4 trillion won. It provided
843.7 168.6 74.8 937.5
Bonds services including the safekeeping and set-
(KTBs)
tlement of securities, receipt of principal and
2–year 12.5 15.2 0.5 27.2
interest, and management of transactions.
3–year 82.3 30.3 30.6 82.0
In an effort to bolster international coop-
5–year 117.7 30.1 24.9 122.9
eration, it also participated in international
10–year 264.6 31.5 17.5 278.5
conferences173) for central banks that provide

20–year 145.3 10.2 1.4 154.1
30–year 205.9 47.1 - 253.0 securities custody services.
50–year 15.4 4.3 - 19.7
Figure Ⅱ- 28. Investment Through BOK Securities
Custody Services (end of year)
Figure Ⅱ- 27. Issuance & Redemption of Korea (trillion won) (trillion won)
Treasury Bills 45 45
41.4
39.8
40 40
Issuance Redemption
(trillion won) (trillion won) 30 30

60 60
25 26.0 25
23.8 24.1
50 48.7 50 20 20
45.3
17.1
15 15
40 40
10 10
30 28.9 30
5 4.6 5
20 20 0 0
16.3
2016 2017 2018 2019 2020 2021 2022
10 10 Source: Bank of Korea
2.0
0 0
2018 2019 2020 2021 2022
172) Central banks that provide securities custody services for foreign central banks and international financial institu-
tions include the U.S. Federal Reserve Bank of New York (FRB NY), the European Central Bank (ECB), the Bank of
England (BOE), the Bank of Japan (BOJ), the People’s Bank of China (PBOC), the Reserve Bank of Australia (RBA),
the Banque de France (BDF), the Deutsche Bundesbank (DBB), the Bank of Canada (BOC), and De Nederland-
sche Bank (DNB).
173) International forums for central banks in major countries that provide securities custody services and the Bank for
International Settlement (BIS) have been held regularly every year since 2013.
C. Fund Management to farmers and fishermen officially registered
with Lump-Sum Savings in Farming and
Under the Bank of Korea Act and other re- Fishing Households.175) As of the end of 2022,
lated pieces of legislation, the Bank is entrust- the total number of subscribers was 233,000
ed by the government to operate and manage households.
94
various funds, including the Public Capital
Management Fund, the Fund for Repayment
Table Ⅱ- 29. B
OK’s Government Fund
of Public Funds, and the Savings Bounty Fund Management Business
for Encouraging Lump-Sum Savings of Farm- Fund Name Objective of Establishment and Major Features
ing and Fishing Households.174)
Established in 1994 to integrate and manage surplus funds and
The Omnibus Account of the Public Capital to efficiently manage the issuance and redemption of Treasury
Management Fund raised 250 trillion won Bonds. The fund is comprised of the Omnibus Account, the
Treasury Loan Account, and the Loan Account.
during 2022 through the issuance of Treasury • The Omnibus Account raises funds through the issuance of
bonds and receipts of principal and interest on Treasury Bonds and utilizes them for the redemption of principal
Public Capital and interest on Treasury Bonds and for deposits in other
deposits, which was paid out in redemptions Management accounts or funds, including the General Account.
Fund • The Treasury Loan Account manages the lending and collection
of principal and interest on Treasury bonds
of funds necessary for improving national welfare and supporting
and deposited into the General Account and major industries.
• The Loan Account manages the withdrawal and redemption
the Foreign Exchange Stabilization Fund. The
of financing loans introduced under public agreements with
Treasury Loan Account raised 0.4 trillion won international cooperation organizations, foreign governments, or
foreign corporations.
through receipts of principal and interest on
loans, which was extended in loans for na- Started in 2003 to facilitate the redemption of debts incurred
tional projects and other purposes. The Loan during financial restructuring. Initiated by the Korea Deposit
Fund for Insurance Corporation and the Korea Asset Management
Account redeemed all of its obligations on for- Repayment Corporation.
eign financing loans in 2016 and its services of Public The fund has contributed a total of 49 trillion won (2003-2006)
Funds and is scheduled to redeem all its obligations by 2027 through
for the collection of relending loans also end- funds transferred from the General Account and net budget
ed at the end of 2022. surpluses.
The Fund for Repayment of Public Funds Saving Bounty Established in 1986 to provide a savings bounty to farm and
raised 7.1 trillion won over the year through Fund for Lump- fishery workers participating in the lump-sum savings program for
Sum Savings farming and fishing households.
contributions from the General Account and of Farming
and Fishing The fund raises funds through annual contributions from the Bank
Net Budget surplus, and was used for the re- Households of Korea and the government.
demptions of debts.
The Savings Bounty Fund for Encouraging
Lump-Sum Savings in Farming and Fishing Meanwhile, in order to enhance the re-
Households raised a total of 53.2 billion won turns of the three funds, the Bank invested
over the year, including 26.6 billion won from temporary idle funds in short-term financial
the government and 26.6 billion won from the products, such as the Money Market Deposit
Bank. It was used to provide savings bounties Account (MMDA) and the RP.
174) Specifically, the Bank carries out the collection of revenues, payment of disbursements, and accounting related to
these tasks.
175) The Savings Bounty Fund for Encouraging Lump-Sum Savings in Farming and Fishing Households provides pay-
ments of additional interest at rates ranging from 0.9 to 1.5 percent per year (and 3.0 to 4.8 percent per year for
low-income households) as a savings bounty to savers at maturity.
Table Ⅱ- 30. Fund Management and Operation
(billion won)
2021(A) 2022(B) Change (B-A)

Public Capital
Management Fund
Omnibus Account 267,466 249,984 -17,482 95
Treasury Loan Account 445 422 -23

Loan Account 344 352 8
Fund for Repayment of
7,098 7,108 10
Public Funds
Saving Bounty Fund for
Lump-Sum Savings of
68 53 -15
Farming and Fishing
Households

9. External Communications Expansion of External Publications of Re-
search Materials
The Bank of Korea has been expanding its The Bank of Korea produced and distrib-
external communications in order to perform uted periodicals, including BOK Issue Notes,
96
its role as the nation’s foremost economic BOK Working Papers, Monthly Statistics
think tank and enhance public understanding Bulletins, and Global Economy Focus reports.
of and trust in the Bank as the country’s cen- By increasing the number of publications of
tral bank. BOK Issue Notes from 32 in 2021 to 48 in 2022
In 2022, the Bank of Korea publicly disclosed and uploading a total of 34 posts to the Bank
the findings of research and supporting data of Korea Blog,176) which was newly launched
on financial and economic conditions through in 2022, the Bank actively made public its
a more diverse range of communication chan- research findings and analysis data. These
nels and endeavored to further expand coop- publications covered the major responsibilities
eration and exchange with the government, of the Bank of Korea, such as monetary policy,
the National Assembly, and academia. As economic outlook, and financial stability, as
quarantine measures against COVID-19 were well as the latest issues, such as changes in
alleviated, the Bank also continued its efforts the financial market conditions and inflation.
to enhance public communications through The Bank also worked steadily to solicit a
the combined and parallel use of online and wide range of opinions from the general pub-
offline communication methods. lic concerning its policies and operations. The
Furthermore, in order to fulfill its social re- Bank conducted its regular reputation sur-
sponsibilities as the nation’s central bank, the vey177) among the general public and experts,
Bank of Korea actively participated in social and continued to collect opinions from exter-
contribution activities such as volunteer work, nal experts on its major reports, including the
while operating various online and offline Annual Report and Monetary Policy Report,
economic education programs to improve the as well as its key policies, such as Base Rate
financial literacy of external economic agents. adjustments, to reflect such opinions in devel-
oping policies and conducting operations.
A. Strengthening Communications
Hosting Events for the Public
The Bank of Korea endeavored to actively
communicate with the public by publishing The Bank of Korea hosted various events
and distributing research materials and by as opportunities to communicate with the
utilizing diverse communication channels, public. First, the Bank held the UCC Contest
including various meetings and events, the for Youth Economic Literacy to boost the in-
Bank’s official website and social media, and terest and understanding of young people in
the Money Museum. the economy, utilizing it as an opportunity to
176) For detailed information, see Box II-3. Launch and Operation of the Bank of Korea Blog.
177) The survey is conducted annually by a polling organization, and the percentage of positive responses from the
general public and experts as to the Bank’s faithful performance of its role as a central bank in 2022 stood at 37.2
percent and 69.7 percent, respectively.
communicate with the younger generation. strengthening its communication with the
A total of eight winners were selected out public through its website and social media
of 69 entries in the contest. It also held the channels, in line with the increase in demand
Monetary Policy Challenge, 178)
which provides for contact-free communication driven by the
college students with an opportunity to en- COVID-19 pandemic. The Bank diversified
97
hance their understanding of monetary policy the content on its official website180) by shar-
by analyzing economic scenarios and making ing its employees’ opinions on financial and

a simulated decision as to the policy interest economic issues via the Bank of Korea Blog
rate. The Monetary Policy Workshop 179)
was launched on its website and by publishing
held to exchange opinions with academia re- business information and market trend data
garding major financial and economic issues produced by the Bank on a new page titled
as well as local economic issues including re- Information and Trend Data.
gional housing price trends and risks, thereby
enhancing public interest in and understand-
Table Ⅱ- 31. Visitors to BOK’s Main Website
ing of the Bank of Korea’s policies and opera-
(1,000 persons)
tions.
9. External Communications
2019 2020 2021 2022
Visitors 4,336 6,069 6,474 8,358

Figure Ⅱ- 29. F
inal Round of the Monetary Policy
Challenge (August 12, 2022) Source: Bank of Korea
In addition to these efforts, the Bank strived

to vitalize its social media presence in keeping
with the changing media landscape. The Bank
held various events on topics such as ways to
identify counterfeit money and prevent its dis-
tribution, as well as the issuance of commem-
orative coins to mark the successful launch of
the Nuri rocket on its YouTube channel181) and
Source: Bank of Korea other social media platforms,182) so as to foster
public interest in the work of the central bank.
Operation of the Official Website and Social Also, in order to introduce its operations to the
Media Channels public in accessible formats, the Bank actively
provided its major reports and press releases
The Bank of Korea dedicated its efforts to in videos, calligraphy pieces, infographics,
178) This competition has been held every year since 2003 in order to provide college students with a venue for experi-
encing a simulated monetary policy decision making process. In 2021, the competition was held in a non-contact
format using video recordings and videoconferencing in consideration of the continued spread of COVID-19, while
the 2022 event was held in a face-to-face format, thanks to the alleviation of quarantine measures, featuring inter-
views without an audience in light of the sustained need to prevent the spread of COVID-19.
179) The workshop was held in an in-person format and attended by a total of 19 university professors.
180) The Bank of Korea’s official website.
181) The Bank of Korea’s YouTube channel.
182) The Bank of Korea is on Facebook, Twitter, Kakao Story, and Instagram.
and “card news” graphics. In particular, to cate with the public. The museum expanded
foster the general public’s understanding of in-person services by holding special exhibi-
the Bank of Korea’s operations and to enhance tions, such as “Exploring Ukraine Through
their financial literacy, the Bank provided Money” and “Reading the Meaning in the
various content via its social media, such as Picture,” and by partially resuming its week-
98
“BOKFLIX,” “Retro BOK,” “BOK Economy end lectures and guided tours, which had been
Snapshot,” “BOK Interview,” and “A Happy suspended due to the COVID-19 pandemic.
Double Life with BOK,” while developing and It also diversified contact-free programs, such
producing YouTube content, such as “Useful as self-guided tours, online lectures, and chil-
Knowledge about Money,” which delivers dren’s summer programs, and conducted a
interesting stories about money, and “Kim total of 107 sessions for such programs with
Kiyul’s Money Study,” which teaches financial 2,971 participants. Thanks to these efforts, the
and economic knowledge with close real-life number of visitors to the Money Museum in-
relevance. As a result of the Bank’s efforts creased significantly, reaching 130,000 people.
to regularly upload viewer-friendly content
tailored to the characteristics of each social
Table Ⅱ- 33. Visitors to BOK Money Museum1)
media channel, the number of subscribers and
(1,000 persons)
followers on its social media channels contin-
2020 2021 2022
ued to increase.
Visitors 31 40 130
The Bank also endeavored to improve public
Note: 1) Includes currency exhibition rooms at regional branches.
access to information by providing YouTube Source: Bank of Korea
livestreams of international conferences and

various press conferences, including the Gov- The Bank also made efforts to respond
ernor’s press conferences on monetary policy promptly and positively to inquiries and com-
decisions. plaints from the public related to its opera-
tions, such as foreign exchange reviews, mon-
etary policy, economic statistics, and currency
Table Ⅱ- 32. Social Media Operated by BOK1)
issuance.
Kakao
YouTube Facebook Twitter Instagram
story
July Aug. Aug. Oct. March Table Ⅱ- 34. Number of Complaints Processed1)
Inception
2013 2014 2014 2014 2021
(occurrences)
Contents
1,224 2,243 2,259 2,121 275 2020 2021 2022
(number of posts)
Subscribers or Settlement 1,494 1,992 2,041
53,920 42,311 4,037 11,470 13,999
Followers
Note: 1) Subject to change, due to ex-post registration of complaints
Note: 1) As of year-end. on the complaint processing ledger.
Source: Bank of Korea Source: Bank of Korea
Enhancement of Public Services Continuing Social Contribution Activities
Despite the continued spread of COVID-19, The Bank of Korea conducted various social
the Bank’s Money Museum enhanced both contribution activities to faithfully fulfill its
in-person and virtual services to communi- social responsibilities as the nation’s central
bank. Given the constraints on in-person B. Strengthening Economic and Finan-
volunteer activities due to the prolonged cial Education
COVID-19 pandemic, the Bank expanded its
fundraising efforts in support of social wel- In response to the changes in economic and
fare organizations, while engaging in various financial conditions at home and abroad, the
99
contribution activities, such as donating rice Bank of Korea provided economic education
and daily necessities, delivering monetary programs to foster rational decision-making

donations, and providing volunteer services to capabilities among the public and to enhance
hunger relief organizations as well as welfare public understanding of the Bank of Korea’s
centers for children and the elderly. major policies. In particular, in-person educa-
In addition, by introducing a special period tion programs were resumed thanks to the re-
for voluntary contributions, the Bank engaged duced risks of COVID-19, and in keeping with
in fundraising and social contribution activities the trend of digital-based remote education,
based on the voluntary participation of its em- continuous efforts have been made to promote
ployees. A variety of special campaigns were online education such as recorded lectures
conducted during this period, such as a com- and real-time virtual classes.
passion-sharing event, a sponsored walk chal- As the Bank resumed in-person education
lenge, and a celebrity lecture series, through programs in 2022, the number of its sessions
which the money raised by its employees was and participants significantly increased com-
delivered to charitable organizations. pared to the previous year.
Figure Ⅱ- 30. Bank of Korea’s Social Contribution

Activities
Table Ⅱ-35. O
n-Site Economic Education
Performance1)
(events, attendance)
2020 20212) 20222)

General 45 197 357
Public (2,123) (8,797) (14,718)
139 233 365
Youths
(5,986) (7,203) (16,374)
184 430 722
Total
(8,109) (16,000) (31,092)
Notes: 1) Figures in parentheses are the total number of people who
have attended.
2) Including video lectures.
Economic Education for the General Public
The Bank expanded opportunities to inter-

act with the audience in July 2022, by resum-
ing the face-to-face "Bank of Korea Friday
Lecture," an advanced lecture series on eco-
nomics for college students and the general
public. In order to improve communication Furthermore, the Bank continued its efforts
with the public, special lectures were deliv- to enhance exchanges with the central and
ered by Monetary Policy Board members Suh local governments. In 2022, the Bank signed
Young Kyung and Park Ki Young, garnering a a memorandum of understanding (MOU) on
highly positive response from the audience. In economic education with the National As-
100
addition, the Bank conducted economic and sembly Secretariat with the aim to enhance
financial education programs at government the capabilities of lawmakers and staff at the
agencies, such as the Korean National Police National Assembly, and conducted the “Eco-
Agency, the Board of Audit and Inspection, nomics and Finance Course for High-Rank-
the National Tax Service, and the Gangwon ing Officials in the National Assembly.” The
Provincial Office, as well as job centers. Mean- Bank’s senior staff members served as lectur-
while, the Bank’s employees delivered lectures ers and received an enthusiastic response from
for the regular courses “Introduction to Eco- the attendees, who highly rated the lecturers’
nomics,” “Principles of Economics II,” and expertise on the subject.
“Money and Banking” at Korea University, as
well as “Special Lectures on Management and
Figure Ⅱ- 32. Lecture by Governor Rhee Chang
Economics” and “Understanding of Econom- Yong at the “Economics and
Finance Course for High-Ranking
ics” at Seoul National University of Science Officials in the National Assembly”
and Technology.
Figure Ⅱ- 31. BOK Friday Lecture: Special

Lecture by Monetary Policy Board
Members
Economic Education Programs for Youth
At elementary, middle, and high schools,

“Economic Lectures for Youth“ were deliv-
ered face-to-face by volunteers selected from
the “Economics Education Volunteers Pro-
gram.“183) The Bank also provided real-time
online classes as part of an indirect education
program titled “Economy Training Courses
183) The program has operated since its launch in April 2013 with the aim of selecting qualified college students to
serve as volunteer economic education instructors for elementary and middle school students. The selected vol-
unteers will conduct relevant activities under the official name YES (Young Economic education Supporters) start-
ing in the year 2023.
for Teachers” for elementary, middle, and video content and then review the information
high school teachers. These classes elicited they learned through quizzes on topics such
positive responses from the participants for as the Base Rate, deposit and lending rates, the
facilitating active communication between the impact of monetary policy on the economy,
lecturer and learners even in a contact-free and communication by the central bank.
101
context. Furthermore, in an effort to promote
the financial inclusion184) of vulnerable social

Figure Ⅱ- 33. YouTube Video “Economics Lecture
groups, the Bank participated in financial and with Quizzes”
economic education for multicultural families
and economic education programs conducted
by relevant institutions to support North Ko-
rean refugees in adapting to life in a market
economy.
During the period of the Global Money
Week campaign185) (the fourth week of March
2022) hosted by the OECD International Net-
work on Financial Education (INFE),186) the Source: Bank of Korea (#1, #2, #3, #4)
Bank cooperated with domestic financial and

economic education organizations including Strengthening External Exchanges and Co-
the Financial Supervisory Service so as to pro- operation in Relation to Economic Education
vide seminars and economic education linked
to online guided tours for the Money Museum. In order to improve economic education
outside schools, the Bank strengthened its
Development of Online Economic Education exchanges and cooperation with related orga-
Content nizations, including the Ministry of Economy
and Finance, the Financial Supervisory Service,
The Bank also produced high-quality online and the Korean Economic Association. The
content and revised its economic education Bank also participated in the annual confer-
textbooks to promote economic education uti- ence hosted by the OECD INFE, actively shar-
lizing various media. ing the goals of economic education and best
The Bank produced a video series titled practices in operating educational programs
“Economics Lecture with Quizzes,” dealing with other participants. In particular, in June,
with four chosen economic and financial topics the Bank shared its experiences on economic
that encompass essential knowledge for teen- education for the public at the request of the
agers. The series allowed learners to absorb the Bank of the Lao PDR, the central bank of Laos.
184) This refers to all relevant activities aimed at improving financial literacy and access to financial services across all
segments of society, including financially underprivileged groups, such as multicultural families and North Korean
refugees.
185) Designating the fourth week of March every year as Global Money Week, the OECD INFE conducts an interna-
tional campaign to raise interest in financial education.
186) Established in May 2008, the OECD INFE is a specialized agency under the OECD for the purpose of exchanging
information among countries and developing international standards and best practices related to financial and
economic education.
a Balanced View on the Condition of Financial
Box Ⅱ-3. Stability” and “The Recent Instability of Short-

Term Finance and Bond Markets and the Bank
of Korea’s Market Stabilization Measures.”
Launch and Operation of the Bank of Furthermore, in order to fulfill the public de-
102 mand for video content, some blog posts were
Korea Blog187)
also produced as short videos of around five
In keeping with the changing media landscape minutes in length, titled “BOK Commentary,”
and in response to the increased demand for which were uploaded on the Bank's website
contact-free communication prompted by the and YouTube channel.188)
spread of COVID-19, the Bank of Korea devoted
its efforts to strengthening its external commu-
Figure Ⅱ- 34. “ BOK Commentary” on BOK
nication by revitalizing its official website and YouTube Channel
social media channels.
As part of such efforts, the Bank launched a
blog on its website in late May 2022 to expand
its external communications. The blog provides
a space to share the opinions of the Bank’s em-
ployees on major current issues such as mone-
tary policy and analysis on economic conditions
with the general public. In addition to the blog,
a new page called Information and Trend Data Source: Bank of Korea
was added to the Bank’s official website menu

in June 2022 with the aim of expanding the ex- These efforts seem to have increased the
ternal distribution of the data produced by the public’s interest in the Bank of Korea’s official
Bank, such as business information and market website, as the total number of visitors to the
trend data. Bank’s website stood at 8.358 million in 2022, a
From May to December 2022, a total of 34 significant increase from 6.474 million in the pre-
blog posts were uploaded to the Bank’s official vious year. In particular, the number of visitors to
website to explain the context behind mone- the Bank’s website after the launch of the blog
tary policy decisions, various economic issues in May 2022 greatly exceeded the figure for the
at home and abroad, and major risk factors in same period in 2021.
an easy-to-understand manner tailored to the
general public. In particular, amid the spread of
concerns regarding financial instability, including
in the credit bond market at the end of the year,
the Bank endeavored to help the public under-
stand current conditions surrounding financial
stability by uploading blog posts such as “Taking
187) The Bank of Korea Blog.

188) “BOK Commentary” on the Bank of Korea’s YouTube channel.
Figure Ⅱ- 35. M
onthly Visitors to the Main BOK
Website in 2021/2022
2022 2021

80 80
103
60 60

40 40
20 20
0 0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
The Bank of Korea plans to continue providing
various content in line with the needs of the pub-
lic via its website and social media channels with
the aim of facilitating the public’s understanding
of economic issues.
QR BOX
QR 1 QR 2
BOK Website BOK YouTube
QR 3 QR 4
BOK Facebook BOK Twitter
QR 5 QR 6
BOK BOK
Kakao Story Instagram
Ⅲ
Management Status
1. Organization Management 107
2. Financial Status 119

1. Organization Management Enhancement of the Capacity for Climate
Change Risk Management
In 2022, the Bank of Korea established As the issue of climate change is having
internal organizations related to digital inno- an increasing impact on economic conditions
vation and climate change response as part and financial systems at home and abroad,
of its “Mid- and Long-Term Strategic Plan the Climate Risk Research Section was es-
(BOK 2030),” and restructured its organiza- tablished as a research institute under the
tions for operational risk management so as to Financial Stability Department in order to as-
107
strengthen its social responsibility manage- sess climate change risks in terms of financial
ment. In addition, in order to transform itself stability and to prepare response strategies in
III. Management Status

into a more open and horizontal organization, a timely manner. The section is tasked with
the Bank finalized its “Management and Per- conducting climate change stress tests, par-
sonnel Restructuring Plan” in June 2022 and ticipating in domestic and global consultative
has since implemented the plan in phases. bodies on financial stability, and researching
and developing policy instruments to respond
1. Organization Management
A. Organizational Structure to climate change.
Acceleration of Digital Innovation Establishment of Organizations for Opera-

tional Risk Management
For the purpose of enhancing its data-based
research and policy decision-making system, The Bank of Korea established the Office of
the Bank established and expanded relevant Ethical Management in order to strictly apply
internal organizations. For example, the Data the standards of ethical conduct for its em-
Management Section was newly formed as an ployees and improve the fairness and reliabili-
organization dedicated to data management in ty of its grievance procedures. In addition, the
response to a significant increase in demand Industrial Safety Management Section and
for internal data services, such as business the Securities Custody Section were estab-
automation and the development of various lished to ensure the effective implementation
analysis methods, following the implementa- of a safety and health management system as
tion of BOK Research Innovation Technology required by legislation, including the Serious
(BReiT) 189)
in June 2020, while the Integrated Accidents Punishment Act, and for operation-
Data Platform Construction Section was es- al risk reduction of securities custody services,
tablished as a project organization in charge respectively.
of building an integrated data platform to sup-
port the data governance framework.
189) The BOK Research Innovation Technology (BReiT) is a research platform that was reformed and expanded into
the BOK Integrated Data Analytics System (BIDAS) in order to enhance the Bank’s capacity for data management
and analysis.
Enhancement of Research Activities of Re- ble management, swift decision-making pro-
gional Branches cedures, and the fostering of young managers.
The Bank adopted a report review and shar-
In order to allow its regional branches to ing process and held meetings and events to
make practical contributions to regional eco- enhance internal cooperation and commu-
nomic development as think tanks for local nication. In order to improve the quality of
communities, the Bank of Korea established reports and to break down departmental and
the Regional Economy Division in the Re- team silos when writing research and policy
search Department to facilitate active joint review reports, the Bank required relevant
108
research between the head office, which con- departments to comply with the principles of
ducts economic analysis at the highest level, pre-submission review and post-submission
and branch offices. Meanwhile, the Bank’s sharing. In addition, a weekly issue forum
Daejeon & Chungnam branch was renamed was created to facilitate timely updates on
the Daejeon, Sejong & Chungnam branch to domestic and global financial and economic
reflect the elevated status of the Sejong Spe- conditions, as well as information sharing and
cial Self-Governing City as the administrative active discussions regarding major reports
center of the country. written by each department. Furthermore, the
Bank continued to hold conversations with the
B. Organization Management Methods Governor, town hall meetings, and internal
communication events in order to vitalize staff
Transition to a Consumer-Oriented Horizon- communication.
tal Organizational Culture Meanwhile, with the aim of elevating its
employees’ sense of belonging and job satis-
In line with the Management and Personnel faction under the motto of “Everyone Grows
Restructuring Plan, the Bank of Korea swiftly Together,” the Bank reformed the personnel
reorganized its policies related to the scope of system for general and special employees and
rank-based authority, work procedures, orga- prepared an evaluation system for growth and
nizational structure, and evaluation systems, cultivation.
thereby creating tangible changes for employ-
ees and allowing them to engage in the effort
Figure Ⅲ- 1. Town Hall Meeting (October 5, 2022)
to restructure the Bank’s organizational cul-
ture.190)
First, the Bank implemented the downward
delegation of authority for each position in se-
quence across all departments, ranging from
the Governor and Senior Deputy Governor
to Deputy Governors, department or division
directors, and team heads. This created the in-
stitutional foundation for the improvement of
organizational dynamics, including responsi-
190) For detailed information, see Box III-1. Bank of Korea’s Management and Personnel Restructuring Plan.
Strengthening of Operational Risk Manage- Operational risk management is performed
ment systematically based on the Risk Register.192)
The Risk Register is a list that specifies control
The Bank of Korea manages operational activities to preemptively identify and manage
risks 191)
using the Three Lines of Defense risks that could occur during the performance
(3LoD) model. Each department or branch, as of operational tasks. It is updated annually
the “first line of defense,” appoints as its oper- to reflect changes in domestic and overseas
ational risk manager a deputy director general working conditions and incidents within and
under whose supervision risk management outside of the Bank.
109
activities are carried out to identify and pre- Every year, each department at the Bank of
vent potential risks in advance, and to ensure Korea implements a Risk and Control Self-As-

the capacity for a rapid response in case of an sessment (RCSA) based on the Risk Register,
emergency. As the “second line of defense,” so as to identify and prevent various poten-
the centralized unit established in the Plan- tial risks that could arise in their operational
ning & Coordination Department handles processes, while the Planning & Coordina-
bank-wide operational risk and business tion Department examines the relevant risks
continuity management through monitoring, through the monitoring and analysis of inci-
planning, and coordinating all relevant oper- dents occurring within and outside the Bank.
ations. In addition, the Audit Department, as The Bank also participated actively in the
the “third line of defense,” performs the role International Operational R isk Working
of assuring the adequacy of risk management Group (IORWG)193) to share experiences and
and internal controls at the levels of the first best practices related to operational risks and
and second lines of defense through internal business continuity management with central
audits. banks from various member countries.
Figure Ⅲ- 2. O
perational Risk Management Figure Ⅲ- 3. Flow Chart of BOK’s Operational
Structure of Bank of Korea Risk Management
Notification
Governor Establishment of Annual Operational Risk Management Plan
Report
Auditor
Executive Officers Risk Register Review Risk Monitoring and Analysis
Report Report Report
Headquarters Report Planning & Audit Risk Register Update

Regional Branches Coordination Dept. Department
Overseas Representative
Offices Support Inspection RCSA
(1st line of defense) (2nd line of defense) (3rd line of defense)
Inspection Risk Control Activities (Prevention, Preparation and Response)

Report
191) Operational risks are due to inadequate internal processes or systems, failures to properly manage employees, or
external events that could hinder an organization’s achievement of its goals, cause financial losses, or damage its
reputation.
192) Introduced in 2015 to systematically link the risk management and auditing tasks, the Risk Register specifies per-
ceived risks with related departments, the anti-corruption index, evaluations of the likelihood and impact of risks,
as well as other related control activities.
193) The IORWG has more than 100 member institutions, such as central banks, the BIS, and the IMF. The Bank of
Korea joined the IORWG in December 2011.
Meanwhile, the Bank of Korea established for all employees to improve their communi-
its Business Continuity Plans (BCPs) to be able cation capacity. In addition, identifying both
to continue operating its key businesses in the common capabilities and position-specific
event of various disaster situations, such as core capabilities, the Bank launched and oper-
cyberattacks, natural disasters, and the spread ated leadership programs for each job position
of infectious diseases and frequently supple- so as to systematically enhance its leadership
ments the plans by, for example, conducting capacity.
scenario-based simulation training. With regard to promotion courses and ca-
In 2022, the Risk Committee 194)
was estab- pacity-building courses for each job position,
110
lished to enhance the risk management sys- lectures about management capacity and
tem and support risk-related decision-making media relations were expanded. Furthermore,
by the Bank’s top management. In addition, themes related to stress and health manage-
the Bank further enhanced its risk response ment and smooth intergenerational communi-
capability by revising its BCPs based on its cation, and conflict management were added
experience of responding to COVID-19 as to the programs for the purpose of nurturing
well as by conducting unannounced scenar- the capabilities required for each job position.
io-based simulation training. Courses related to data science, including
new digital technolog y and data analysis
C. Education and Training methods, were expanded and systematized
to support the bank-wide pursuit of digital
Operation of Strategic Human Resource De- innovation. To this end, the training demand
velopment Programs for big data, blockchains, and artificial intelli-
gence was identified specifically and relevant
The Bank of Korea operated its education programs were established through cooper-
and training programs in 2022 with a focus ation with relevant departments. In addition,
on the preparation of training programs to courses for frequently used software, such as
support the pursuit of the “Mid- and Long- R and Python, were operated with a focus on
Term Strategic Plan (BOK 2030)” and its “Me- big data analysis and utilization.
dium-Term Strategies in 2022” in response to
changes in the training environment after the E n h a n c e m e n t of J o b C o m p e te n cy by
COVID-19 pandemic. Strengthening Linkages Between Occupa-
O w ing to the g row ing impor ta nce of tional Training and Work
smooth intergenerational communication and
cooperation in effective business operation, While supporting the implementation of its
the Bank expanded its communication courses strategies, the Bank of Korea developed poli-
194) T he committee is divided into the Operational Risk Subcommittee and the Financial Risk Subcommittee. The
Operational Risk Subcommittee consists of the chairperson (Deputy Governor in charge of management), four in-
ternal members (Director General of the Planning & Coordination Department, and Director of the Office of Com-
pliance & Ethics the Office of Legal Affairs, and the Office of Branch Affairs) and four external members, while the
Financial Risk Subcommittee is comprised of the chairperson (Deputy Governor in charge of management) and
four internal members (Director Generals of the Planning & Coordination Department, the International Depart-
ment, and the Financial Markets Department, as well as Director of the Reserve Management Strategy Division).
cies to enhance the expertise of its employees format. Furthermore, courses on leadership,
and expanded relevant training programs. communication enhancement, coding and
Specifically, the Bank abolished eligible posi- foreign language programs using mobile
tions for basic and advanced training courses apps were reorganized and added to external
to provide broader opportunities for employ- e-learning training programs as part of efforts
ees to develop their expertise and practical to spread the self-directed learning culture.
performance capabilities, while expanding Overseas training programs were largely
courses on asset market analysis, an area of conducted online due to quarantine measures.
keen interest to the Bank’s employees. The Bank identified online programs provid-
111
Meanwhile, the Bank adjusted some train- ed by major central banks and international
ing programs to strengthen linkages between organizations with high relevance to the busi-

occupational training and work, as well as ness and role of the Bank of Korea as the na-
to further satisfy participating employees’ tion’s central bank, and also provided its em-
demand for training programs. The Bank con- ployees with timely information about various
ducted a trial practical training course for the webinars hosted by other institutes, including
tasks of two departments so as to enable em- the South East Asian Central Banks (SEACEN)
ployees to effectively share the knowledge and center, the IMF-Singapore Regional Training
experience they accumulated in the field, and Institute (IMF-STI), and the Wealth Man-
included case studies to the basic work-related agement Institute (WMI) in Singapore. In
tasks course for Grade 6 officials and admin- addition, training courses, such as BIS-FSI
istrative staff to ensure higher job relevance. Connect and IMFx, which are available at any
In addition, the Bank conducted the trial time using online platforms, were developed
operation of a newly developed media train- to enable employees to cultivate their exper-
ing course to support employees’ effective tise without the constraints of time and place,
communication with media, including broad- as well as for greater immersion in learning.
casting.
D. Human Resources Operation
Expansion of Contact-Free Training Sessions
and Enhancement of Self-Directed Learning The Bank of Korea continued its efforts to
implement a fair recruitment process to se-
The Bank of Korea increased the proportion cure outstanding talent with expertise and
of contact-free sessions to reflect changes in job competency, as well as basic capabilities,
employee preference for training methods in including a sense of duty as central bank
the post-pandemic era, thereby supporting employees and cohesion as member of an
the spread of the self-directed learning cul- organization. The Bank also strove to operate
ture. Programs with little need for in-person its human resources so as to respond to social
training were operated online, while training expectations.
programs related to organizational culture
were held in a group training format so far as
circumstances permitted, in addition to the
flexible operation of the online/offline hybrid
The Bank worked to recruit new employees
Table Ⅲ- 1. Number of New Hires per Year 1)
with a focus on promoting social responsibili-
(persons, %)
ty by hiring talented personnel from the prov-
2017 2018 2019 2020 2021 2022
inces in accordance with its Provincial Talent
Junior Economist 70 59 59 55 50 63
Employment Quota, specialized vocational
Assistant 30 19 17 20 32 27
high school graduates through a separate
Security 21 38 39 24 22 10
Others 8 13 11 11 5 13 screening process, and persons with disabili-
Total 129 129 126 110 109 113 ties through another separate screening pro-
Male 69 95 53 53 53 57 cess.
112
Female 60 34 73 57 56 56 In addition, the Bank continued its efforts
(%) (46.5) (26.4) (57.9) (51.8) (51.4) (49.6) to secure talented human resources with var-
Note: 1) Based on recruitment year. ious skills by adding a local expert section to
its hiring categories of new junior economists
(G5) from 2022.
During 2022, the Bank recruited a total Meanwhile, the proportion of female man-
of 113 employees, including 63 new junior agers at the Bank has continued to rise, and in
economists (G5), maintaining the number of particular, the proportion of female managers
new hires at more than 110 each year since above a G4 grade reached its highest-ever lev-
2017. This is mainly attributable to changes el, standing at 22.0 percent (9.0 percent above
in medium- and long-term workforce supply a G3 grade) as of year-end 2022.
and demand, such as the recent retirement of
employees.
Table Ⅲ- 2. Number of Female Managers1)
The Bank also made continuous efforts to
(persons, %)
enhance fairness in its recruitment process. 2000 2005 2010 2019 2020 2021 2022
The Bank continued to implement its blind Female Managers
35 76 90 230 251 270 284
hiring process, which removes information (G4 grade or higher)
G3 grade or
such as an applicant’s sex, educational back- 3 4 5 23 31 43 61
higher
ground, and alma mater from the application Percentage
3.6 7.1 8.2 17.8 19.3 20.9 22.0
form, and expanded the participation of ex- (G4 grade or higher)2)
G3 grade or
ternal committee members in the interview 0.6 0.6 0.8 3.4 4.6 6.4 9.0
higher
process.
Notes: 1) Female staff of G4 grade or higher.
The Bank devoted active efforts to increas- 2) Percentage of female managers among total managers.
ing professionalism and openness in its hu-
man resources management by hiring a total
of 13 external specialists, including an open E. C orruption Prevention and Promo-
position (press officer), Ph.D.-level research- tion of a Clean Culture
ers, IT specialists, and experienced lawyers.
The Bank also made efforts to recruit experi- To ensure a high level of integrity and cred-
enced experts by selecting 13 candidates with ibility commensurate with the public’s ex-
prior professional work experience when hir- pectations, the Bank of Korea made stringent
ing administrative staff (C3). efforts to prevent corruption and promote a
clean culture within the Bank by, for example, provided by the Integrity Ombudspersons on
expanding the relevant infrastructure and projects including “Replacement of Outdated
rolling out new and more effective compliance Information Protection Devices due to the
training and programs. Head Office Relocation.”
First of all, to strictly implement the stan- Through these efforts, 2022 Comprehensive
dards of ethical conduct for employees and Integrity Assessment of Public Institutions by
enhance the fairness and reliability of griev- the Anti-Corruption and Civil Rights Com-
ance procedures, the Office of Complianc mission, the Bank was awarded a Grade 2,
& Ethics was established directly under the thereby maintaining its status as one of the
113
Senior Deputy Governor. This contributed to top public service organizations in terms of
improving the expertise and independence of integrity.

the Bank’s compliance tasks. The Bank of Korea will continue to make
The Bank also established internal regula- every effort to maintain its integrity as a cen-
tions to prevent conflicts of interest related to tral bank by satisfying the public’s high ex-
the duties of its employees, in line with the pectations of integrity and credibility.
enforcement of the 「Act on the Prevention of
Conflict of Interest Related to Duties of Public F. S trengthening of Job Expertise and
Servants」 in May 2022. In particular, the Bank Effectiveness through Digital Innova-
established the 「Standards for Investing in tion
Financial Instruments」 which aims to prevent
and manage conflicts of interest situations in In 2022, the Bank of Korea completed its
which employees who deal with financial and efforts to lay the institutional foundation for
economic information pursue private gains the acceleration of digital transformation and
through financial investment using informa- began a full-fledged transition to a data gov-
tion obtained through their duties. ernance framework. Furthermore, the Bank
In order to encourage employees to natu- conducted various policy research and studies
rally internalize a mindset of integrity in their using new digital technology and state-of-the-
everyday work, the Bank introduced ethics art data analysis methods.
training methods aimed at fostering empathy First, the Bank enacted the Detailed Regu-
and communication, such as “Ethics Learning lations on Digital Innovation to form the basis
from Books,” “Educational Card News Series,” for the swift and flexible implementation of
and “On-the-job Integrity Guardians,” and projects that integrate new technology into the
provided targeted ethics training programs to Bank’s businesses. This move is expected to
corruption-vulnerable areas so as to increase contribute to the acceleration of digital trans-
the effectiveness of the Bank’s ethics training. formation by streamlining the procedures for
As part of efforts to enhance the external carrying out various challenging tasks, which
transparency and credibility of its major proj- take advantage of new digital technology,
ects, the Bank appointed two experienced including artificial intelligence, big data, and
independent, external specialists as Integri- cloud computing.
ty Ombudspersons. During 2022, the Bank Second, the Bank established and began
actively reflected the advice and evaluations to operate the data governance framework,
which consists of three parts: a data com- and stored to actively respond to the increased
mittee (policy and strategy review board), an demand for data and research, as well as to
organization dedicated to data-related affairs support research activities.
(Office of Digital Innovation), and data spe- Fourth, the Bank incorporated analysis
cialists at each department (Data Stewards). methods that apply artificial intelligence tech-
As the first agenda item resolved by the data nology, such as deep learning and natural lan-
committee, the Data Strategic Plan outlined guage processing, into its policy research ac-
the three strategic objectives of establishing tivities. Through the complementary use of big
a culture of data collaboration, enhancing data-based econometric models for economic
114
the linkage between data and work, and re- outlooks and deep-learning algorithms, the
sponding to a new data environment, which Bank established a system of quarterly GDP
are scheduled to be implemented over a three- nowcasting, which allows weekly updates of
year period from 2022 to 2024. In addition, an estimated GDP growth. The Bank also devel-
operation plan for data stewards was prepared oped an inflation tone index, which identifies
to strengthen collaboration among depart- inflation tones (increase or decrease) from
ments related to data governance. The data news articles by using a deep learning-based
stewards designated at major departments natural language processing model and then
serve to systematically manage data assets converts the results into an index. In addition,
in collaboration with the Office of Digital In- a real-time housing market index was devel-
novation and share their knowledge of data oped to swiftly identify housing market trends
utilization within the Bank. through daily updates of housing price data.
Third, in line with the Data Strategic Plan,
the Bank expanded its internal data analysis G. Improvement and Expansion of IT
platform, the BOK Research Innovation Tech- Systems
nology (BReiT), into the BOK Integrated Data
Analytics System (BIDAS) for the purpose of In 2022, the Bank of Korea improved and
strengthening its data management and anal- expanded its IT systems to systematically and
ysis functions. As the first step in this process, effectively respond to the changing digital en-
it developed a data catalog that allows the vironment, in line with the 10th Information
management of the Bank’s listed data assets, and Digital Strategic Plan (ISP) and the Mid-
and linked it to data and business intelligence and Long-Term Strategic Plan (BOK 2030).
(BI) of the existing data analysis platform, First, the Bank finalized its project to im-
thereby creating an environment in which prove the functions of DigiWorks (Digital
users can effectively search, read, and ana- Workspace) for the systematic storage of infor-
lyze data. In particular, the Bank developed a mation and knowledge and active document
graph-sharing dashboard with an Excel add- sharing and collaboration, commencing the
in function, which supports the automated use of DigiWorks across all departments in
creation of tables and charts, so as to increase December 2022. The Bank expanded its func-
the data productivity of its employees and tions to enable the storage of a wide range
business efficiency. In addition, various data, of content, including videos and provided a
such as big data and text, were newly collected platform on which all staff can freely read data
and share feedback.
Table III-3. Objectives and Tasks of the 10th
Second, the Bank developed an integrated Digitalization and Digital Strategic Plan
asset management system to efficiently and BOK 2030: Active Pursuit of Digitalization
systematically manage its assets, and im-
proved user-friendliness by adopting a web Strategic Objective Strategic Tasks
document management software that does ① Setting up a smart work environment
② Advancing DigiWorks & BOIS
not require the installation of separate approv- ③ Renewing the business management
al software in the BOK Information Sharing Digital system
Transformation ④ Innovating payment and settlement
System (BOIS) business portal. systems
⑤ Upgrading information systems in foreign 115
Third, the Bank upgraded its framework exchange and bond markets
and application software and replaced hard- Advanced Data ⑥ Establishing a data governance framework

Analysis Foundation ⑦ Building an integrated data platform
ware to ensure the stable operation of its
⑧ Improving work efficiency based on new
system in response to outdated hardware and Innovated Businesses technologies
with the Application of ⑨ Advancing investigations and research
system software used in the foreign exchange New Technologies with new technologies
information system. ⑩ Expanding the use of cloud technology
Fourth, the Bank replaced desktop PCs that ⑪ Establishing and relocating to the Gyeonggi
Improving Stability of IT IT Center
have internet access with laptops to improve Infrastructure ⑫ Establishing an information protection
system in response to new technologies
its IT working environment, enhanced the se-
⑬ Raising the expertise of the IT workforce
Enhancement of Digital
curity and management efficiency concerning Capacity
⑭ Integrating IT outsourcing
⑮ Overhauling IT operation system
printouts, and conducted a trial project for the
adoption of a cloud printing system to reduce
paper use.
Finally, the Bank improved its IT infrastruc- H. Construction of an Integrated Annex
ture and strengthened its cybersecurity sys-
tem to ensure the stable operation of overall The Bank of Korea proceeded with the con-
IT systems. Outdated servers and network struction of an integrated annex to reinforce
devices were replaced with new ones, and the safety and security of its Head Office195)
security control was enhanced to effectively as an institution of national importance. As
respond to cyber threats. In addition, the Bank a large-scale project including the demolish-
examined the status of personal information ment of the first annex, the construction of an
management to prevent personal data leakage integrated annex (16 aboveground levels and
and provided relevant education on an ongo- four underground levels), and the renovation
ing basis. of the main building and the second annex,
the project commenced in December 2019 and
is planned to be completed in February 2023.
Following the foundation work in 2020 and
the framework construction in 2021, the inte-
rior and exterior finishing work took place in
195) The Bank of Korea Head Office consists of five buildings: the original building (completed in 1912, which is now
the Money Museum), the main building (1987), the first annex (1964), the second annex (1932), and the Sogong
Annex (1965).
2022. The exterior of the building is comprised
Figure Ⅲ- 4. Construction Site of Bank of Korea’s
of steel curtain walls and aluminum, and all Integrated Annex (as of Dec. 2022)
buildings were constructed with triple-pane
windows to improve energy efficiency. Terra
cotta was used on a section of the building’s
facade to visually distinguish itself from adja-
cent buildings. Inside the building, finishing
work is being carried out on the construction
of a vault, interior decorations, and the instal-
116
lation of mechanical, electric, firefighting, and
ICT equipment.
The integrated annex was designed under Source: Bank of Korea
the concept of “The One,” embodying the
design intent to integrate buildings built in
different periods into a coherent unit in har-
mony with the surrounding environment. In
line with this concept, an integrated lobby
area was newly created to connect the lobby
of the main building with the visitor’s center
in the second annex, so that all indoor public
spaces are organically connected together.
For the lower levels of the integrated annex,
low-iron glass was used for its higher trans-
parency, providing an overview of the outside
landscape, the second annex, and the Money
Museum.
Meanwhile, the construction period was ex-
tended three times due to the implementation
of a 52-hour workweek system, the spread of
COVID-19, and due to on-site circumstanc-
es. The completion date was also postponed
from March 2022, as originally planned, to
February 2023. The Bank of Korea will place
construction quality and safety above all else
while paying close attention to external and
internal risks with regard to managing the
construction process.
on long-term employment in specific fields.
Box Ⅲ-1. Fourth, the plan aims to increase the sense of

belonging among working-level employees who
support the core capabilities of the organization
Bank of Korea’s Management and Per- through the reorganization of the personnel
sonnel Restructuring Plan system with regard to their roles and responsi-
bilities, and to enhance the recognition of perfor-
The Bank of Korea established the Man- mance and employee motivation through the re-
agement and Personnel Restructuring Plan in form of the evaluation system in a direction that
collaboration with its staff and global human is aligned with the new management philosophy 117
resource consulting firms in June 2022 to trans- and will be accepted by the employees.
Ⅳ. Management Status
form itself from an “inward-oriented vertical Finally, the Bank will make efforts to exter-
organizational culture” into a “consumer-orient- nally expand its regional research activities and
ed horizontal organizational culture.” This plan produce differentiated content so that regional
incorporates comprehensive innovation plans, branches of the Bank can establish themselves
which deal with not only hardware, such as as regional think tanks.
organizational and personnel policies, but also This plan has been implemented in phases
software, including working procedures and hu- since 2022, and the Bank will continue its efforts
man resource management. to ensure the stable establishment of the plan
First, the plan aims to ensure swift deci- throughout the organization.
sion-making and greater opportunity for em-
ployees to exercise their capabilities by dele-
gating a large part of the Governor’s authority
to lower positions as well as readjusting the role
and responsibility of each position accordingly.
In addition, the plan seeks to strengthen the role
of division directors by establishing divisions and
vitalize agile organizations such as task forces
so as to enhance the dynamic nature and flexi-
bility of the organization.
Second, the plan aims to form an organiza-
tional culture of cooperation and communication
and to maximize the synergy of collective intel-
ligence by facilitating mutual review and bank-
wide information sharing in the process of carry-
ing out all businesses.
Third, an expert career path system will be
introduced in the fields of economic models
and statistics to strengthen the professional ca-
pability of both the organization and individuals
through the accumulation of top expertise based
Figure Ⅲ- 5. Objectives of Restructuring the Management and Personnel System
118
2. Financial Status Assets
As of the end of 2022, total assets at the

The Bank of Korea, in principle, issues Bank of Korea stood at 582,826.1 billion won, a
banknotes and coins based on its curren- decrease of 12,817.5 billion won from the pre-
cy-issuing authority and manages the issued vious year-end level of 595,643.7 billion won.
currency through loans to financial institu- The decrease in total assets is attributable to
tions and the government, as well as through the significant drop in the number of foreign
purchases of government bonds. Given the currency securities, despite an increased USD/
119
significant increase in foreign currency in- KRW exchange rate.
flows, the Bank absorbs liquidity by issuing By type of asset, securities were worth

Monetary Stabilization Bonds (MSBs) and 393,365.2 billion won, down 42,219.0 billion
holds foreign exchange reserves in order to won from the previous year-end due to the
maintain market liquidity at an appropriate decrease in foreign currency securities, while
level. Accordingly, the Bank’s assets are large- loans on bills and due from banks were worth
ly made up of foreign currency securities and 40,975.0 billion won and 52,941.7 billion won,
2. Financial Status
deposits from banks, while its liabilities are respectively, up by 695.2 billion won and
mainly composed of currency issued, MSBs 22,977.3 billion won from the previous year-
issued, and deposits. end figures.
Consequently, the profits and losses of the
Bank of Korea are significantly influenced by
Figure Ⅲ- 6. Assets1) (main item) (as of year-end)
the difference between the coupon rate for
MSBs and the rate of return on foreign assets, 2022 2021
as well as by foreign exchange rates. (trillion won)
The Bank’s capital consists of legal and vol- 393.4

Securities
untary reserves, as well as undivided earned 435.6
surplus for term. Meanwhile, in accordance 41.0

Loans on
with Article 99 of the Bank of Korea Act, 30 Bills 40.3
percent of the net income of the Bank is allo-

Due from 52.9
cated to the legal reserve,196) and some of the Banks 30.0
residual net income can be set aside for the

95.5
voluntary reserve for specific purposes, with Other 2)
89.8
the approval of the government. After the al-
Notes: 1) Total assets amounted to 583 trillion won, a decrease of 13
location, the remaining net income is paid to
trillion won from the previous year-end level of 596 trillion
the General Revenue Account of the Govern- won.
2) S
ecurities purchased under repurchase agreement and
ment.
non-current assets increased by 11.2 trillion won and
1.6 trillion won, respectively, while other current assets
decreased by 7.5 trillion won. Total amount increased by 5.7
trillion won.
196) With the revision of the Bank of Korea Act in 2011, the amount to be allocated to the legal reserve was adjusted
from 10 percent to 30 percent of the net income.
Liabilities and Capital
Figure Ⅲ- 7. L
iabilities and Capital1) (main item)
(as of year-end)
Total liabilities at the Bank of Korea at the
2022 2021
end of 2022 amounted to 560,906.5 billion (trillion won)
won, a decrease of 9,858.1 billion won from Currency 174.9
Issued 167.6
the previous year-end level of 570,764.6 billion Monetary 112.4
Stabilization
Bonds Issued 140.2
won. The decrease in total liabilities is attrib- Government 169.7
Deposits and
Deposits 175.3
utable to the decrease in Monetary Stabiliza- Securities Sold 20.0
Under Repurchase
11.2
tion Bonds issued due to the decreasing size of Agreement
Monetary 7.3
120 Stabilization
the liquidity adjustment requirement. Account
Exchange
7.0
23.0
Revaluation
By type of liability, currency issued and de- Adjustment Account 7.4
53.6
Other 2)
posit balances of financial institutions stood 62.1
21.9
Capital
at 174,862.3 billion won and 161,185.1 billion 24.9
won, respectively, up by 7,290.4 billion won Notes: 1) Total liabilities amounted to 561 trillion won, a decrease of
10 trillion won from the previous year-end level of 571 trillion
and 8,626.1 billion won from the previous
won.
year-end, while Money Stabilization Bond 2) O
ther current liabilities and income tax payable decreased
by 7.4 trillion won and 1.2 trillion won, respectively. Total
issuance and government deposits stood at
amount decreased by 8.5 trillion won.
112,446.1 billion won and 8,501.4 billion won, Source: Bank of Korea
respectively, down by 27,772.4 billion won and

14,263.5 billion won from the end of 2021. Income and Expenses
As of end-2022, total capital at the Bank
decreased by 2,959.5 billion won from the pre- In 2022, the Bank’s net income decreased
vious year-end level of 24,879.0 billion won to by 5,318.6 billion won from the previous year-
21,919.6 billion won. end level of 7,863.8 billion won, to 2,545.2 bil-
By type of capital, the reserve increased by lion won. This was mainly attributable to the
2,359.2 billion won, and the undivided earned increase in total expenses due to a dramatic
surplus (net income) decreased by 5,318.6 bil- increase in losses on sales of foreign currency
lion won. securities and the interest on MSBs exceeding
the increase in total revenue due to an in-
crease in the interest on foreign exchange re-
serves management and the profit on foreign
exchange transactions.
Operating revenue increased by 1,905.9
billion won from the previous year to 20,944.3
billion won as the interest on securities and
the profit on foreign exchange transactions
increased by 879.2 billion won under the in-
fluence of a rise in interest rates and by 2,292.5
billion won due to the increase of sales of for-
eign currency, respectively.
Operating expenses increased by 9,417.0
billion won from the previous year to 17,689.9
billion won as the interest on MSBs and the
loss on sales of securities increased by 456.5
billion won due to the increase in interest rates
and by 6,963.3 billion won due to a decrease
in bond and stock prices, respectively.
Table Ⅲ- 4. Income and Expenses 121

Subject 2021 (A) 2022 (B) Change (B-A)

Total Revenue 190,832 209,946 19,115
Operating Revenue 190,384 209,443 19,059
(Interest on Securities) (66,787) (75,578) (8,792)
(Profit on Foreign
(144) (23,069) (22,925)
Exchange Transaction)
2. Financial Status
(Profit on Sales of
(102,567) (67,356) (-35,211)
Securities)
Non-Operating Income 448 503 56
Total Expenses 83,418 176,982 93,565
Operating Expenses 82,729 176,899 94,170
(Interest on Monetary
(14,635) (19,200) (4,565)
Stabilization Bonds)
(Loss on Sales of
(27,674) (97,307) (69,633)
Securities)
Non-Operating Expenses 689 83 -605
Income Before Income
107,414 32,964 -74,450
Taxes
Income Taxes(-) 28,776 7,512 -21,264
Net Income 78,638 25,452 -53,186
Disposal of Net Income
Regarding the disposal of the net income,

which totaled 2,545.2 billion won in the fiscal
year 2022, 763.6 billion won (30 percent of the
net income) was allocated to the legal reserve,
27.0 billion won was voluntarily reserved as a
contribution to the Bounty Fund for Raising
Lump-Sum Savings of Farming and Fishing
Households, and the remaining 1,754.6 billion
won was transferred to the General Revenue
Account of the Government.
④ The Bank of Korea possesses a loans on
Box Ⅲ-2. government account as an asset and a gov-

ernment deposits account as a liability on its
balance sheets. This is because, as the central
Characteristics of the Bank of Korea’s government’s bank, the Bank loans money to
Financial Statements the government of Korea and stores the national
treasury funds.
Due to its special nature as a central bank re-
sponsible for implementing monetary and credit ⑤ The Bank of Korea possesses an invest-
122 policies, as well as foreign exchange policies, ments account and a securities on investment
the financial statements of the Bank of Korea in international financial institutions as assets
have some different characteristics compared to on its balance sheets. This is because the Bank
for-profit companies and financial institutions. invests money in International Monetary Fund or
financial organizations in which the Republic of
① The Bank of Korea is a special juristic per- Korea is a member on behalf of the government.
son without capital under Article 2 of the Bank of
Korea Act, and thus no capital stock is listed on ⑥ The Bank of Korea possesses a holdings
its balance sheets. However, it possesses cap- of special drawing rights account as an asset
ital solely comprised of earned surplus, since a and an allocations of special drawing rights ac-
part of its net income is allocated to its reserves count as a liability on its balance sheets. This
in anticipation of the need to compensate for is because special drawing rights (SDRs), an
losses. international payment method created by the
International Monetary Fund (IMF) and allocated
② The Bank of Korea possesses a curren- to its member countries, serve both as reserve
cy issued account as a liability on its balance assets and as liabilities that the IMF can require
sheets. The account shows the total amount of its member countries to repay under certain
currency issued under Article 47 of the Bank of conditions.
Korea Act, and the Bank is liable to pay the face
value of Bank of Korea notes to its holders. ⑦ The Bank of Korea does not include gains
and losses on foreign currency translation,
③ The Bank of Korea does not have a bal- which is based on the foreign currency valuation
ance in the cash account as an asset on its of assets and liabilities denominated in foreign
balance sheets. This is because the Bank of currencies, in the profits and losses for the cur-
Korea notes held by the Bank of Korea do not rent term, and instead includes them in the ex-
comprise the Bank’s assets or liabilities, but an change revaluation adjustment account, which
unissued liability under Article 50 of the Bank of is a deferred account. This is because the Bank
Korea Act. The Bank of Korea notes held by the of Korea holds a large amount of foreign curren-
Bank are processed under the currency issued cy assets as its foreign exchange reserves and
account only after the notes are externally trans- thus its financial stability could be significantly
ferred through the teller’s window. undermined if gains and losses on the valuation
of the assets based on the changing foreign
exchange rate were reflected in the profit/loss
accounting for the current term.
⑧ The Bank of Korea does not write a cash

flow statement for its financial statements, unlike
general companies and financial institutions,
since the Bank’s cash flow information is not
deemed significant in consideration of its nature
as a central bank with the exclusive right to issue
currency. 123
Ⅳ. Management Status
Financial Statements
Table Ⅲ- 5. Balance Sheets (as of Dec. 31, 2022, and Dec. 31, 2021)
(million won)
2022 2021
Assets
Ⅰ. Current assets 559,753,156 574,136,194
1. Cash - -
124 2. Gold and silver bullions 6,076,398 5,684,186
3. Holdings of special drawing rights 18,802,596 18,220,372
4. Securities(Note 2) 393,365,197 435,584,182
a. National bonds 32,067,645 28,959,293
b. Government guaranteed securities and other - -
c. Foreign securities 361,297,551 406,624,889
5. Due from banks(Note 3) 52,941,651 29,964,400
a. Due from banks current 41,428,521 23,983,588
b. Due from banks on time 11,513,130 5,980,812
6. Overdraft - -
7. Liquidity adjustment loans - -
8. Bills discounted - -
9. Loans on bills(Note 4) 40,975,015 40,279,849
10. Loans on securities(Note 4) - -
11. Securities bought under resale agreement(Note 5) 15,491,600 4,282,478
12. Loans on government(Note 4) - -
13. Loans on international financial organizations(Note 4) 1,434,699 1,498,708
14. Foreign exchange 67,712 65,099
15. Agencies 1,845,782 2,496,004
16. Inter-office account - -
17. Other assets 28,752,507 36,060,916
(Exchange revaluation adjustment account) (-) (-)
Ⅱ. Non-current assets 23,072,962 21,507,459
1. Investment assets 22,186,111 20,848,794
a. Investments(Note 6) 14,376,321 13,068,652
b. Securities on investment 7,802,419 7,772,761
c. Telecommunication usage rights 19 19
d. Miscellaneous subscription rights 7,353 7,363
2. Tangible assets 830,378 597,907
3. Intangible assets 56,473 60,758
Total assets 582,826,118 595,643,654
2022 2021
Liabilities
Ⅰ. Current liabilities 552,885,904 562,787,446
1. Currency issued 174,862,272 167,571,891
2. Monetary stabilization bonds issued(Note 7) 112,446,061 140,218,466
3. Monetary stabilization account 7,280,000 7,000,000
4. Government deposits 8,501,437 22,764,952
5. Deposits 161,185,135 152,559,014 125
a. Checking deposits 99,752,498 81,351,667

b. Liquidity adjustment deposits 1,512,300 22,000
c. Temporary deposits 4,438,910 2,760,650
d. Due to banks on demand 55,481,427 68,424,697
e. Other foreign deposits - -
6. Securities sold under repurchase agreement(Note 8) 20,000,000 11,153,400
7. Allocations of special drawing rights 17,929,213 17,638,360
2. Financial Status
8. Inter-office account - -
9. Other liabilities 50,681,786 43,881,363
(Exchange revaluation adjustment account) (23,026,342) (7,389,912)
Ⅱ. Non-current liabilities 8,020,634 7,977,162
1. Borrowings - -
2. Reserves for retirement allowances 218,216 204,401
3. Liabilities to international monetary institute 7,802,419 7,772,761
Total liabilities 560,906,539 570,764,608
Capital
Ⅰ. Surplus 21,919,580 24,879,046
1. Earned surplus 21,919,580 24,879,046
a. Legal reserves 15,936,586 13,577,432
b. Voluntary reserves 3,437,768 3,437,768
c. Undivided earned surplus for term 2,545,226 7,863,846
Total capital 21,919,580 24,879,046
Total liabilities and capital 582,826,118 595,643,654
Table Ⅲ- 6. Income Statement (for the years ended Dec. 31, 2022, and Dec. 31, 2021)
(million won)
2022 2021
Ⅰ. Operating Revenue 20,944,304 19,038,390
1. Interest Received and Discount Fees 11,613,647 8,621,125
(1) Interest on Securities(Note 9) 7,557,820 6,678,666
(2) Interest on deposits 269,169 27,412
(3) Interest on overdraft 1,919 435
126 (4) Discount fees on domestic bills - -

(5) Interest on loans on bills 249,085 109,273
(6) Interest on loans on securities - -
(7) Interest on liquidity adjustment loans 210 16
(8) Interest on securities bought under resale agreement 138,466 1,612
(9) Interest on loans on government 27,329 884
(10) Interest on loans on international finance organization 18,171 830
(11) Miscellaneous interest received 3,351,480 1,801,997
2. Commissions received 174,550 137,804
3. Profit on sales of securities 6,735,606 10,256,699
4. Gain on redemption of monetary stabilization bonds 113,603 8,348
5. Profit on foreign exchange transaction 2,306,897 14,414
6. Profit on gold and silver bullions - -
Ⅱ. Operating expenses 17,689,914 8,272,908
1. Interest expense and discount fees 7,013,754 4,629,718
(1) Interest on deposits 870,180 1,504,219
(2) Interest on monetary stabilization account 221,663 54,624
(3) Interest on monetary stabilization bonds issued 1,919,974 1,463,502
(4) Interest on securities sold under repurchase agreement(Note 10) 477,993 108,496
(5) Interest on borrowings - -
(6) Miscellaneous interest paid 3,523,944 1,498,877
2. Commissions paid 230,339 173,837
3. Loss on sales of securities 9,730,716 2,767,437
4. Loss on redemption of monetary stabilization bonds 12 54,457
2022 2021
5. Loss on foreign exchange transaction - 2,000
6. Loss on gold and silver bullions - -
7. International financial institutions contribution 53,298 -
8. Bank-note and coin manufacturing expenses 121,387 128,388
9. Provision for severance pay 37,459 30,940
10. Depreciation expense 23,765 28,665
11. Amortization of intangible assets 19,710 19,752 127
12. General and administrative expenses 459,474 437,714

Ⅲ. Operating income 3,254,390 10,765,483
Ⅳ. Non-operating income 50,341 44,787
1. Income from disposal of assets 215 4,541
2. Miscellaneous profits 50,126 40,246
Ⅴ. Non-operating expense 8,332 68,854
1. Donation 5,000 65,000
2. Loss from disposal of assets 1,727 3,005
3. Miscellaneous loss 1,604 849
Ⅵ. Income before income taxes 3,296,400 10,741,415
Ⅶ. Income taxes 751,174 2,877,570
Ⅷ. Net income 2,545,226 7,863,846
Table Ⅲ- 7. Statements of Changes in Equity (For the years ended Dec. 31, 2022, and Dec. 31, 2021)
(million won)
Paid-in Capital Earned Surplus Total

Ⅰ. Balance as at Jan. 1, 2021 - 22,171,299 22,171,299
Ⅱ. Payments to general revenue account of the government -5,121,987 -5,121,987
Ⅲ. Contributions to fund for farming and fishing households -34,112 -34,112
Ⅳ. Net income 7,863,846 7,863,846
Ⅴ. Balance as at Dec. 31, 2021 - 24,879,046 24,879,046
128
Ⅵ. Balance as at Jan. 1, 2022 - 24,879,046 24,879,046
Ⅶ. Payments to general revenue account of the government -5,478,077 -5,478,077
Ⅷ. Contributions to fund for farming and fishing households -26,615 -26,615
Ⅸ. Net income 2,545,226 2,545,226
Ⅹ. Balance as at Dec. 31, 2022 - 21,919,580 21,919,580
Table Ⅲ- 8. Statements of Appropriation of Earned Surplus (for the years ended Dec. 31, 2022, and Dec. 31, 2021)
(million won)
2022 2021
Ⅰ. Undivided Earned Surplus 2,545,226 7,863,846

1. Balance at beginning of year - -
2. Net income 2,545,226 7,863,846
Ⅱ. Appropriation of earned surplus 2,545,226 7,863,846
1. Legal reserve 763,568 2,359,154
2. Voluntary reserve 27,033 26,615
a. Contribution to fund for farming and
(27,033) (26,615)
fishing households
b. R
eserve for specific purposes (-) (-)
3. Payment to general revenue account of the
1,754,625 5,478,077
government
Ⅲ. U
ndivided earned surplus to be carried over
- -
to subsequent year
Notes to the Financial Statements
1. Significant accounting policies
A. Basis of preparation
Except in the case specifically articulated by related laws and regulations, the presented finan-
129
cial statements have been prepared in accordance with the Accounting Regulations enacted under
Article 8 of Bank of Korea Act and Article 33 of the Bank’s Articles of Incorporation. The generally

accepted accounting principles shall apply upon matters not determined by the Accounting Reg-
ulations of the Bank. Meanwhile, considering the insignificance of cash flow information to the
functions of the Bank as a central bank, statements of cash flow have not been prepared. In addi-
tion, the statements of appropriation of earned surplus have been separated from the notes and
reported as separate financial statements in consideration of their significance.
2. Financial Status
B. Recognition and measurement of assets and liabilities
Assets are recognized at the date of acquisitions and liabilities are recognized when obligated.
Assets are not assessed at the fair values but recorded at the acquisition cost or the amortized cost
in the balance sheet.
(1) Securities
Debt securities are measured at the amortized cost while equity securities are measured at the
acquisition cost. The Bank applies the specific identification method to debt securities and the
moving average method to equity securities when calculating the acquisition cost to recognize the
realized gains or losses on sales of the securities.
(2) Investment assets
Investment assets are measured at the acquisition cost.
C. Recognition of revenues and expenses
Revenues and expenses are recognized on the accrual basis.
D. Foreign exchange translation and recognition of profits and losses on foreign ex-
change transactions
(1) Foreign exchange translation
Assets and liabilities denominated in foreign currencies are translated into Korean won, ap-
plying the exchange rate or the arbitrage rate at the end of the reporting period. The gains and
losses on the translation are not recognized as profit or loss but in a foreign exchange revaluation
adjustment account, which is a deferred account. Revenues and expenses denominated in foreign
currencies are translated into Korean won applying the exchange rate at the date of the transac-
tion.
130
(2) Recognition of profits and losses on foreign exchange transactions
Profits and losses on foreign exchange transactions are determined by the difference between
the Korean won equivalent received from the sale of foreign currency and the equivalent value of
purchase cost of the foreign currency.
E. Transactions under resale and repurchase agreement
Transactions under a resale and repurchase agreement are loan and borrowing transactions se-
cured by securities. Purchasing securities under a resale agreement is accounted for as securities
bought under resale agreement and selling securities under a repurchase agreement is accounted
for as securities sold under repurchase agreement on the Balance Sheet.
F. Depreciation of tangible assets and amortization of intangible assets
(1) Tangible assets
Buildings are depreciated using the straight-line method, while other tangible assets are depre-
ciated on the declining balance method. Tangible assets are presented on the Balance Sheet at the
acquisition cost less accumulated depreciation.
(2) Intangible assets
Development costs are amortized based on straight-line method whereas software is amortized
using declining balance method and presented on the Balance Sheet at the acquisition cost less
accumulated amortization.
G. Reserve for retirement allowances
Reserve for retirement allowances of the Bank under the retirement policy shows an accrued
estimation for retirement at the end of the reporting period. Under the National Pension Act, the
Bank transferred a certain portion of retirement allowances for employees to the national pension
fund. The amount transferred to the national pension fund and the plan assets for the retirement
pension which is under the Act on the Guarantee of Employees’ Retirement Benefits is reflected
in the financial statements as a reduction of the reserve for retirement allowances.
H. Income taxes
Income taxes comprise the current tax expense calculated for the periods in accordance with
statutory corporate tax regulations and the local income tax added to the corporate income tax.
131
2. Securities

Details of securities as of December 31, 2022 and 2021 are as follows
(won)
Description
2022 2021
2. Financial Status
Subject Type
National bonds Korean Treasury Bonds 32,067,645,376,320 28,959,292,668,944
Government guaranteed
- - -
securities and others
Foreign government bonds
Foreign securities 361,297,551,392,302 406,624,889,085,299
and others
Total 393,365,196,768,622 435,584,181,754,243
3. Due from Banks
Details of due from banks as of December 31, 2022 and 2021 are as follows
(won)
Description
2022 2021
Subject Institutions
Due from banks current Foreign financial institutions 41,428,521,167,577 23,983,588,411,678
Due from banks on time Foreign financial institutions 11,513,129,569,741 5,980,811,783,193
Total 52,941,650,737,318 29,964,400,194,871
4. Loans
Details of loans as of December 31, 2022 and 2021 are as follows

(won)
Description
2022 2021
Subject Debtors
Local financial institutions
Loans on bills 40,975,014,884,224 40,279,849,000,000
and others
Ministry of Economy and
Loans on government - -
Finance
132 Loans on international
IMF 1,434,698,934,858 1,498,707,598,241
finance organization
Loans on securities Local financial institutions - -
Total 42,409,713,819,082 41,778,556,598,241
5. Securities Bought Under Resale Agreement
Details of securities bought under resale agreement as of December 31, 2022 and 2021 are as
follows
(won)
Description
2022 2021
Subject Counterparty
Securities bought under
Local financial institutions 15,491,600,000,000 4,000,000,000,000
resale agreement (in won)
Securities bought under
resale agreement (in foreign Foreign financial institutions - 282,477,773,377
currency)
Total 15,491,600,000,000 4,282,477,773,377
6. Investments
Details of investments as of December 31, 2022 and 2021 are as follows

(won)
Description
2022 2021
Subject Investee
The Export-Import Bank of
1,165,000,000,000 1,165,000,000,000
Korea
Local investment Korea Housing Finance
765,000,000,000 645,000,000,000
Corporation
Subtotal 1,930,000,000,000 1,810,000,000,000
International financial
Off-Shore investment 12,446,320,693,194 11,258,651,742,502
organizations
Total 14,376,320,693,194 13,068,651,742,502
7. Monetary Stabilization Bonds Issued
Details of monetary stabilization bonds issued as of December 31, 2022 and 2021 are as follows
(won)
Description 2022 2021

Coupon Bonds 102,986,060,639,045 130,128,466,439,291
Discount Bonds 9,460,000,000,000 10,090,000,000,000
Total 112,446,060,639,045 140,218,466,439,291
133

8. Securities Sold Under Repurchase Agreement
Details of securities sold under repurchase agreement as of December 31, 2022 and 2021 are as
follows
2. Financial Status
(won)
Description
2022 2021
Subject Counterparty
Securities sold under
repurchase agreement (in Local financial institutions 20,000,000,000,000 11,000,000,000,000
won)
Securities sold under
repurchase agreement (in Foreign financial institutions - 153,399,662,052
foreign currency)
Total 20,000,000,000,000 11,153,399,662,052
9. Interest on Securities
Details of interest on securities for the years ended December 31, 2022 and 2021 are as follows
(won)

Interest on securities (in won) 626,723,698,847 550,386,532,126
Interest on foreign securities 6,931,096,483,888 6,128,279,624,783
Total 7,557,820,182,735 6,678,666,156,909
10. Interest Expenses on Securities Sold Under Repurchase
Agreement
Details of interest expenses on securities sold under repurchase agreement for the years ended
December 31, 2022 and 2021 are as follows
(won)

Interest expenses on securities sold
477,993,102,063 108,496,217,256
under repurchase agreement (in won)
Interest expenses on securities sold
134 under repurchase agreement (in foreign 17,939 -
currency)
Total 477,993,120,002 108,496,217,256
12th Floor S&S Bldg.
48 Ujeongguk-ro, Jongno-gu,
Seoul, 03145, Korea
T : +82 2 397 6700
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www.samdukcpa.co.kr
Independent Auditor’s Report

(Based on a report originally issued in Korean)
135
The Governor,

Bank of Korea
Opinion
We have audited the financial statements of Bank of Korea (the Bank), which comprise the balance sheets as of
December 31, 2022 and 2021, and the statements of income, statements of changes in equity and statements of
appropriation of earned surplus for the years then ended, and notes to the financial statements, including a summary
of significant accounting policies and other explanatory information.
2. Financial Status
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of
the Bank as of December 31, 2022 and 2021, and its financial performance and its changes in equity and earned
surplus for the years then ended in accordance with the Accounting Regulations enacted under Article 8 of Bank of
Korea Act and Article 33 of the Bank’s Articles of Incorporation (the Accounting Regulations of the Bank).
Basis for opinion
We conducted our audit in accordance with Korean Standards on Auditing. Our responsibilities under those standards
are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We
are independent of the Bank in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the Republic of Korea and have fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Emphasis of matter
Without qualifying our opinion, we draw attention to Note 1 to the financial statements, which states that the financial
statements of the Bank have been prepared in accordance with the Accounting Regulations of the Bank and generally
accepted accounting principles and practices that apply to matters not specified in the Accounting Regulations of the
Bank.
Responsibilities of management and those charged with governance for the financial statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with
the Accounting Regulations of the Bank, and for such internal control as management determines is necessary to
enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, management is responsible for assessing the Bank’s ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless management either intends to liquidate the Bank or to cease operations, or has no realistic alternative
but to do so.
Those charged with governance are responsible for overseeing the Bank’s financial reporting process.
A member of Nexia International

Nexia International is a leading worldwide network of independent accounting and consulting firms, providing
comprehensive portfolio of audit, accountancy, tax and advisory services.
1
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
Korean Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with Korean Standards on Auditing, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
136
 Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
 Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Bank’s internal control.
 Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by management.
 Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Bank’s ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements
or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence
obtained up to the date of our auditor’s report. However, future events or conditions may cause the Bank to cease
to continue as a going concern.
 Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and
whether the financial statements represent the underlying transactions and events in a manner that achieves fair
presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
February 17, 2023
This audit report is effective as of February 17, 2023, the independent auditor’s report date. Accordingly, certain
material subsequent events or circumstances may have occurred during the period from the date of the independent
auditor’s report to the time this report is used. Such events and circumstances could significantly affect the
accompanying financial statements and may result in modifications to this report.
2
Appendix
1. Overview of Bank of Korea 139
2. Minutes of the Monetary Policy Board Meeting 149
3. Contributing Departments & Authors by Section 150

1. Overview of Bank of Korea At the time of its enactment, the Bank of
Korea Act specified the Bank’s role as the
central bank in devising and implementing
(1) History and Mission monetary, credit and foreign exchange pol-
icies. In 1962, however, the Act was revised
The Bank of Korea was established on June in a direction that enabled the Bank to ac-
12, 1950, following the passage of the Bank of tively support the government-led economic
Korea Act on May 5 of that year, to serve as growth initiatives. Its top decision-making
the central bank of Korea with the purposes of body, the
stabilizing the value of the national currency, The Monetary Policy Board was accordingly
promoting the soundness of the banking and renamed the Monetary Board of Korea, while
credit systems, and developing the Korean the number of its government-nominated
economy. This took place against a backdrop members increased significantly. In addition,
139
of hyperinflation and economic turmoil in most of its functions related to the formulation
the years immediately after Korea’s liberation of foreign exchange policy and the manage-
Appendix
from Japan. The Bank began initially as a gov- ment of the foreign exchange reserves were
ernment-invested organization with paid-in transferred to the government.
capital of 1.5 billion won, but was later reorga- From the late 1980s, in line with the pro-
nized in 1962 as a non-capital special organi- motion of financial liberalization, there were
zation in accordance with the first revision of active discussions regarding the expansion of
the Bank of Korea Act. the central bank’s role in maintaining price
Figure Appendix- 1. First Monetary Policy Board Meeting (June 5, 1950)

stability as well as its independence, leading to the Bank was given the position of ex-officio
amendments to the Bank of Korea Act in 1997 member of the Monetary Policy Board, and
and 2003. The reforms in the 1997 amend- the portion of the budget subject to prior
ment included the introduction of an inflation government approval was narrowed from en-
targeting regime and the restoration of the compassing all expenditures to covering only
name Monetary Policy Board, while all Board expenditures classified as salary.
members were given the position of standing The Global Financial Crisis provided an
member. In addition, the position of Board impetus for accelerated discussions of legis-
chair was transferred from the Minister of lative amendments to strengthen the Bank’s
Finance and Economy to the Governor of the function of financial stabilization, so as to es-
Bank. This change served to enhance the neu- tablish conditions to facilitate the prevention
trality and autonomy of the Bank. However, of financial instability and the implementa-
the authority to supervise banks moved from tion of swift countermeasures in response to
140 the Bank to a newly-established joint financial financial crises. This led to another revision
supervisory institution. The 2003 revision of of the Bank of Korea Act in 2011. The revised
the Act meanwhile stipulated the operation Act stipulates the purpose of the Bank as
of inflation targeting from a medium-term the promotion of price stability through the
perspective, while the Bank was delegated the formulation and implementation of effective
additional functions of oversight and moni- monetary policy, with a focus on financial sta-
toring of the payment and settlement systems. bility in the process. The Act thus states that
In addition, the Senior Deputy Governor of the Bank, being in charge of monetary policy,
Figure Appendix- 2. Monetary Policy Board Meeting

has a mandate for financial stability alongside whose role is to regularly audit the Bank’s
its primary objective of price stability. Under business operations.
the revision of the Act in 2012, it was then
stipulated that candidates for the post of Gov- A. Monetary Policy Board
ernor of the Bank must pass through a Na-
tional Assembly confirmation hearing process The Monetary Policy Board serves as the
prior to appointment. In addition, the Act was Bank of Korea’s top decision-making body,
revised in 2018 for the purpose of introducing and maintains the authority to deliberate
a system of staggered terms , which ensures
196)
and decide on matters of monetary policy
service terms of varying lengths for members and the operations of the Bank. The Board is
of the Monetary Policy Board by adjusting the composed of seven members, including the
term lengths of some members, and adding Governor and the Senior Deputy Governor
local governments to the list of entities that of the Bank as ex-officio members, as well as
141
are subject to the collection of data for the five appointed members. The five appointed
Bank’s statistics and economic survey activi- members are individuals with substantial
Appendix
ties. experience or outstanding expertise concern-
ing finance, economics, or industry who are
(2) Organization appointed by the President of Korea on the
recommendation of pertinent organizations197)
The Bank of Korea’s leadership consists of to serve as standing members on the Board198).
the following: the Monetary Policy Board, Board members serve four-year terms199)200),
which deliberates and decides on matters re- with the exception of the Senior Deputy Gov-
lated to monetary policy and the operations of ernor whose term is three years, and are eli-
the Bank; the executive body, comprising the gible for reappointment201). The Governor also
Governor, the Senior Deputy Governor, the serves as the Chair of the Board. The Chair
Deputy Governors, the head office divisions, represents the Monetary Policy Board and
domestic branches, etc.; and the Auditor, presides over Board meetings. If the Chair is
196) In accordance with the revision of the Act, the term of members, which is initially recommended by the Governor
of Bank of Korea and the Chairperson of the Financial Services Commission, was adjusted to three years from
four years (stipulated in Addenda) and the term of a member who is not appointed immediately after the expiration
of the predecessor’s term shall be deemed to have commenced immediately after the expiration of the predeces-
sor’s term so as to maintain the staggered term structure.
197) Recommendations are put forward by the Minister of Strategy and Finance, the Governor of the Bank of Korea,
the Chairperson of the Financial Services Commission, the Chairperson of the Korea Chamber of Commerce of
Industry or the Chairperson of the Korea Federation of Banks.
198) Following the revision of the Bank of Korea Act on December 31, 1997 (enforced on April 1, 1998), all appointed
members were given the position of standing member, in contrast to their previously temporary roles, so as to en-
hance their accountability for and expertise on monetary policy.
199) In accordance with the introduction of staggered terms for the Monetary Policy Board in March 2018, the service
term of three years is applicable only to prospective members who were appointed on the recommendation of the
Governor of the Bank of Korea and the Chairperson of the Financial Services Commission.
200) Park Ki Young, who began his term as a member of the Monetary Policy Board on Oct. 6, 2021, will serve the re-
maining term (of the three-year term) in place of former board member Koh Seungbeom.
201) The Governor and the Senior Deputy Governor of the Bank of Korea may be reappointed only once each to serve
a consecutive term.
unable to conduct their duties owing to un- The Board reviews and resolves decisions
avoidable circumstances, a member appoint- regarding the Base Rate, the issuance of Bank
ed in advance by the Board serves as acting of Korea notes, loan and deposit policies, open
Chair. market operations, payments and settlements,
and inspections of financial institutions. It
also deliberates and decides on general issues
Figure Appendix- 3. Members of the Monetary
Policy Board concerning the management of the Bank,
(as of Dec. 31, 2022) including its budget, settlement of accounts,
Rhee, Chang Yong

organizational framework, staff remuneration
Governor of Bank of Korea, since April 21, 2022
policy, etc. Except in special cases, resolutions
Major Work Experience
Director, Asian and Pacific Department, are adopted through simple majority votes
International Monetary Fund
Chief Economist, Asian Development Bank among members present at meetings, requir-
Vice Chairman, Financial Services Commission
ing the attendance of at least five members as
142 a quorum.
Cho, Yoon-Je
Recommended by the Minister of Economy and
Finance, since April 21, 2020 Board plenary meetings are divided into
Emeritus Professor, Sogang Univ. regular meetings, normally scheduled on the
Advisor to the President on Economic Policy
Chief Economist, IMF/WB Thursdays of the second and fourth weeks of
every month, and ad hoc meetings convened
Suh, Young Kyung
Recommended by the Chairman of the Korea
by the Chair if deemed necessary by the Chair
Chamber of Commerce and Industry, since April
21, 2020
or at the request of at least two members.
Major Work Experience In 2022, the Board held 25 plenary meet-
Director General, SGI, Korea Chamber of
Commerce and Industry
Deputy Governor, BOK
ings, consisting of 24 regular meetings and
Director, Financial Markets Dept., BOK
one ad hoc meeting. In addition, it held 88
Joo, Sangyong
Recommended by the Chairman of Finance consultation meeting for purposes such as
Services Commission, since April 21, 2020
Major Work Experience exchanges of opinions among members on
Professor, Konkuk Univ.
Member, National Economic Advisory Council financial and economic conditions, discus-
Research Fellow, KIEP
sions of major current issues and preliminary
Lee, Seungheon deliberations on items to be proposed in the
Senior Deputy Governor of Bank of Korea, since
Aug. 21, 2020 plenary meetings, as well as 14 meetings for
Major Work Experience deliberations on the Bank’s budget and settle-
Deputy Governor, BOK
Director General, International Dept., BOK
Press Officer, BOK
ment of accounts.
Park, Ki Young
Recommended by the Governor of Bank of Table Appendix- 1. N
umber of Monetary Policy
Korea, since Oct. 6, 2021 Board Meetings
Professor, Yonsei University (number)
Member, National Economic Advisory Council
Asst. Professor, University of Maryland, Baltimore Consul- Delibe-
Year Plenary Total
County
Regular Ad-hoc tations rations
Shin, Sung Hwan 2020 28 24 4 87 16 131
Recommended by the Chairman of the Korea
Federation of Banks, since July 28, 2022 2021 26 24 2 85 15 126
Professor of Finance, Hongik University
2022 25 24 1 88 14 127
President, Korea Money & Finance Association
President, Korea Institute of Finance Source: Bank of Korea

The Board announces the dates of its plena- data and opinions necessary for its deliber-
ry meetings in advance for the following year. ation and decision-making processes. The
The plenary meetings are held for a total of current Governor, Rhee Chang Yong, was ap-
24 times throughout the year, including eight pointed on April 21, 2022.
sessions for the determination of the monetary The Senior Deputy Governor, as a member
policy direction and four sessions devoted to of the Monetary Policy Board, participates in
Financial Stability Meetings. The minutes of the process of decision-making by the Board,
each Board plenary meeting are recorded and alongside the Governor, and assists the Gov-
stored in written form. In addition, in order to ernor in all matters concerning the Bank. If
strengthen the transparency and accountabil- the Governor is unable to conduct their duties
ity of the Bank’s monetary policy, the minutes owing to unavoidable circumstances, the Se-
of the meetings to determine its monetary nior Deputy Governor serves as acting Gover-
policy decisions are publicly disclosed on nor.
143
the first Tuesday following two weeks after a The Deputy Governors are chosen by the
meeting. Governor, and serve three-year terms to assist
Appendix
the Governor and the Senior Deputy Gover-
B. Executive Officers and Auditor nor.
The Bank employs one Auditor who is
The executive officers of the Bank of Ko- appointed by the President upon the recom-
rea include the Governor, the Senior Deputy mendation of the Minister of Economy and Fi-
Governor, and five Deputy Governors. The nance, and who also serves a three-year term.
Governor is appointed to a four-year term by The Auditor regularly monitors the Bank’s op-
the President of Korea following deliberation erations and reports all findings to the Mone-
by the Cabinet and a National Assembly con- tary Policy Board.
firmation hearing, and may be reappointed
once to serve a consecutive term. The Senior C. Departmental Organization and Re-
Deputy Governor is chosen by the President sponsibilities
for a three-year term upon the Governor’s rec-
ommendation, and may also be reappointed As of the end of 2022, the Bank of Korea
once to a consecutive term. As Chair of the has 17 departments and ten sub-department
Monetary Policy Board, the Governor partici- offices at its head office, with a subordinate
pates in the Board’s decision-making process structure of 21 divisions and 147 teams. There
and executes the monetary policy as set by the are 16 domestic branches of the Bank across
Board, while exercising the authority granted Korea, supported by seven regional economy
to them by the Bank of Korea Act and other research divisions and 54 teams. There are
legislation as head of the Bank. The Governor also five overseas representative offices in op-
is also obligated to notify the Board of matters eration. As of the end of 2022, the number of
requiring its attention, and to provide it with Bank employees stood at 2,364203).
203) This figure excludes 13 persons, including the Governor, the members of the Monetary Policy Board, including the
Senior Deputy Governor, the Executive Officers, and the Auditor.
The functions of the individual depart-
Figure Appendix- 4. E xecutive Officers and
ments, branches, etc., are as follows. Auditor
(as of Dec. 31, 2022)
Planning & Coordination Department Governor

Rhee,
Chang
Yong
Develops and promotes management strat- (since April
21, 2022)
egies, manages operational risk, manages
the organization and its human resources,
Senior Deputy
formulates the budget and settles accounts, Governor
coordinates functions among departments, Lee,
Seungheon
coordinates and integrates activities of the do- (since Aug. 21,
2020)
mestic branches and overseas representative
offices, and conducts research into regional
Deputy Deputy
144 economies. It also oversees the management Governor Governor
Lee, Bae,
of the minutes of the Monetary Policy Board Hwanseok Joonsuk
(since March (since Nov.
meetings, of the review of laws and regula- 9, 2020) 24, 2020)
tions, and of digital innovation.

Deputy Deputy
Governor Governor
Communications Department Min, Lee,
Jwa Hong Sang
(since May 17, Hyeong
2021)
Coordinates and takes overall charge of (since July
22, 2021)
communication activities, including the col-
lection of internal and external opinions, Deputy
Governor
performs PR activities, including operating Lee,
Jongryeol
the Bank of Korea Money Museum, manages (since July 20,
2022)
informational material, prepares the Annual
Report and provides economic education to
the public. Auditor
Kang,
Sungjun
(since Sept.
Information Technology Department 10, 2021)
Conducts the planning of IT-related tasks,

the development and operation of the Bank’s Source: Bank of Korea
information systems, and the introduction

and management of computer equipment.
Human Resources & Administration Depart- related to systemic risks; analyzes macropru-
ment dential policy instruments and their transmis-
sion mechanisms; conducts research on banks
Administers the management of human and non-bank financial institutions; performs
resources, the delivery of wages, and welfare research on the overall financial system; pre-
benefits, the Bank’s real estate and facilities pares the Financial Stability Report; and eval-
management, security, etc. uates climate risks in terms of financial stabil-
ity. It also conducts management analysis and
Bank of Korea Academy inspections of financial institutions.
Provides professional education and train- Monetary Policy Department

ing for the Bank’s employees.
Drafts the Bank’s monetary policy; plans
145
Research Department and implements specific policy measures; an-
alyzes the conditions for and effects of mone-
Appendix
Conducts analyses of macroeconomic tary policy; conducts research and studies on
trends and related prospects, analyses of in- pending issues related to monetary and credit
dustrial trends and research on industrial pol- policy; and prepares the Monetary Policy Re-
icies, and analyses of employment and related port.
prospects; suggests the inflation target and
performs related research; and develops and Financial Markets Department
analyzes econometric models. It also handles
work related to the analysis and forecasting Implements moneta r y polic y through
of overseas economic trends, and support for open-market operations; analyzes and fore-
regional research. casts monetary conditions and interest rates;
and analyzes financial market and corporate
Economic Statistics Department finance trends.
Organizes, analyzes, and produces econom- Payment & Settlement Systems Department
ic statistics on the national income, money
and finance, the balance of payments, prices, Supervises the operation, management, and
flow of funds charts, input-output tables, and monitoring of the payment and settlement
business management analyses. It also evalu- systems; carries out research and studies into
ates the quality of the Bank’s statistics and op- payment and settlement systems; conducts
erates the Economic Statistics System (ECOS). planning and research for electronic finance;
promotes financial informatization; conducts
Financial Stability Department research on digital currencies; and oversees
tasks related to loans and deposits, operation
Carries out the analysis and comprehensive of the national treasury, securities, and funds.
evaluation of financial stability conditions;
measures, analyzes, and develops models
Currency Department on currency and finance, financial systems,
international banking, international trade,
Carries out the issuance, distribution, and macroeconomics, industry, labor, and the
control of currency, as well as research and North Korean economy, while engaging in
investigation into currency and banknote research exchanges with other countries.
issuance systems. It also handles matters re-
lated to the mechanization of the banknote Audit Department
issuance process.
Audits the operations of the Bank of Korea.
International Department
Regional Branches
In charge of planning, research, and anal-
ysis in connection with foreign exchange and Conduct research on the regional econo-
146 international finance. It provides services mies, as well as business related to currency
related to the foreign exchange markets and supply and demand, the receipt of Treasury
exchange rates; manages foreign reserves funds, and securities management.
and foreign debt; reports on foreign exchange
transactions and provides the relevant fol- Overseas Representative Offices
low-up management; monitors and examines
foreign exchange transactions; and operates Undertake research on finance and the
the foreign exchange computer network. economies of their host countries and neigh-
boring regions of interest; information gather-
International Affairs Department ing; and overseas management of the foreign
currency assets of the Bank of Korea.
Carries out planning and research related to
international cooperation; handles exchanges
Figure Appendix- 5. Organization
with international financial institutions and
central banks; and engages in cooperative ef- Monetary Policy Board
forts on financial information. Governor
Senior Deputy
Reserve Management Group Governor
Auditor
Conducts planning for the Bank’s foreign Deputy Governors(5)
currency asset management; manages the Audit

Departments(16)
Department(1)
overseas operations and risks of its foreign
Regional Branches(16)
currency assets; and analyzes their manage-
ment performances. Overseas Representative Offices(5)
Economic Research Institute
Oversees medium- to long-term research

D. Organization Chart of Bank of Korea Planning & Coordination
Strategic Planning Team, Ope
Department (5)
(As of December 31, 2022)
Office of Legal Affairs(2) Financial Legal Affairs Team,
Deputy Governor Monetary Policy MPB Administrative Support
Board Secretariat (1)
Secretariat
Office of Digital Innovation (2) Digital Innovation Planning Te

Office of Compliance & Ethics
Communications Department (4) Communications Planning & C
Office of Economic Education Education Planning & Coordin

(2)
Information Technology Department IT Planning Division(IT Planni
Deputy Governor
[3](10) ment Information Systems Te
Human Resources & Administration Human Resources Planning T

Department(5)
Office of Property Management Property Administration Team
(3)
Security Management Office (2) Security & Emergency Planni
Monetary Policy Board
Bank of Korea Academy(4) Program Planning & Coordina
Overall Research & Forecastin

Governor Senior Deputy Governor Deputy Governor Research Department[4](15) flation Monitoring & Forecastin
Analysis Team, U.S. & Europe
Statistics Planning Team, Eco

Economic Statistics Department[2]
International Investment Posi
(13)
National Balance Sheet Team
Advisor to Governor Press Office
Financial Stability Planning &
Financial Stability Department[2](8)
Team, Non-Bank Analysis Tea
Office of Bank Examination(5) Examination Planning Team,
Monetary Policy Planning & C

Deputy Governor Monetary Policy Department[1](6)
Policy Research Team, Policy
Financial Market Affairs Team
Financial Markets Department[1](6)
Team)
Payment & Settlement Systems Payment Systems Policy Team

Department[2](9) Payment Systems Risk Mana
Office of Treasury & Debt
Treasury Team, Debt Securiti
Securities(2)
Currency Department(6) Issue Policy Team, Issue Plan
Deputy Governor International Planning & Coor

International Department[2](8)
Team), Foreign Exchange Bus
5 Representative Officies New York Representative Off
International Affairs Department[1] International Affairs Strategy

(6) Team, Knowledge Partnership
Reserve Management Strate
Reserve Management Group[3](11) sion(Investment Strategy Tea
Team, Reserve Information S
Economic Research Institute<6> Research Planning & Coordin
16 Branches: B
usan, Daegu & Gyeongbuk, Mokpo, Gwangju & Jeonnam
Chungbuk, Gangwon, Incheon,Jeju, Gyeonggi, Gyeongnam
Audit Planning Team, Plannin

Auditor Audit Department (6)
Audit Team
Notes : 1) Busan, Daegu & Gyeongbuk, Gwangju & Jeonnam, Jeonbuk, Daejeon, Sejong & Chungnam, Gangwon, Incheon, Jeju, Gyeonggi, Gyeongnam, Gangnam 2)Busan, Daegu
Busan, Daegu & Gyeongbuk, Gwangju & Jeonnam, Daejeon, Sejong & Chungnam, Incheon * [ ] Divisions, ( ) Teams, < > Teams in Economic Research Institute
erational Risk Team, External Affairs Team, Organizational Management Team, Budget & Accounting Team
, General Legal Affairs Team
Team
eam, Data Service Team
Coordination Team, Communications Management Team, New Media Team, Bank of Korea Money Museum Team
nation Team, Education Team
ing Team, IT Risk Management Team, IT Security Team), Information Systems Division(Accounting Information Systems Team, Settlement Information Systems Team, Manage-
eam, Policy Information Systems Team), IT Infrastructure Division(Accounting & Settlement Server Team,General Server Team, Network & Data Center Team)
Team, Human Resources Management Team, Payroll & Welfare Team, Labor Relations Team, Expense Accounting Team
m, Facilities Administration Team, Procurement Service Team
ing Team, Security Administration Team
ation Team,Program Design & Management Team, Adminstration & Support Team, Faculty Team
ng Team, Economic Activities Analysis Team, Macroeconomic & Fiscal Research Team, International Trade Research Team, Labor Market Research Team, Inflation Research Division(In-
ng Team, Inflation Analysis Team), Macroeconomic Modeling Division(Model Forecasting Team, Macroeconomic Model Study Team), Global Economy Research Division(Global Economy
Economies Team, Asia-Pacific Economies Team, China Economies Team), Regional Economy Research Division(Regional Research Cooperation Team, Regional Economy Analysis Team)
onomic Survey Team, Statistics Information Team, Monetary & Financial Statistics Division(Monetary & Financial Statistics Team, Flow of Funds Team, Balance of Payments Team,
ition Team, Corporate Statistics Team), National Accounts Division(National Accounts Coordination Team, National Expenditure Statistics Team, Input-Output Statistics Team,
m, Price Statistics Team)
& Coordination Team, Systemic Risk Analysis Team, Financial Stability Analysis Team, International Financial Regulation Team, Financial System Analysis Division(Bank Analysis
am), Financial Stability Research Division(Financial Stability Research Team, Financial System Research Team)
Commercial Bank Team Ⅰ, Commercial Bank Team Ⅱ, Specialized Bank Team, Internet Bank Team
Coordination Team, Credit & Reserves Policy Team, Monetary Policy Analysis Team, Monetary Policy Communication Team, Monetary Policy Research Division(Monetary & Credit
y Framework Research Team)
m, Market Operations Team, Money Markets Team, Financial Markets Research Team, Capital Markets Division(Fixed Income Markets Team, Equity Markets & Corporate Finance
m, Payment Systems Research Team, Payment Systems Management Team, Loans & Settlements Team, Payment Systems Oversight Division(Payment Systems Stability Team,
agement Team), e-Finance Division(e-Finance Planning Team, e-Finance Research Team, Digital Currency Research Team
ies Team
nning Team, Cash Services Team, Cash Processing Team Ⅰ, Cash Processing Team Ⅱ, Currency Research Team
rdination Team, Foreign Exchange Accounting Team, Foreign Exchange Market Team, International Finance Division(Capital Flows Analysis Team, International Finance Research
siness Division(Foreign Exchange Review Team, Foreign Exchange Investigation Team, Foreign Exchange Information Management Team)
ice, Frankfurt Representative Office, Tokyo Representative Office, London Representative Office, Beijing Representative Office
y & Coordination Team, International Organizations Team, Regional Organizations Team, Financial Cooperation Team, International Cooperation Division(International Relations
p Program Team)
gy Division(Reserve Management Planning Team, Risk Management Team, External Fund Management Team Ⅰ, External Fund Management Team Ⅱ), Reserve Investment Divi-
am, Treasuries Portfolio Team Ⅰ, Treasuries Portfolio Team Ⅱ, Credit Portfolio Team, Asset-Backed Securities Portfolio Team), Reserve Management Support Division(Settlement
System Team)
nation Team, Financial & Monetary Economics Team, International Economics Team, Macroeconomics Team, Micro & Institutional Economics Team, North Korean Economy Team
m, Jeonbuk, Daejeon, Sejong & Chungnam, General Administration Team1), Regional Economy Research Division(Planning & Financial Research Team, Economic
m, Gangneung, Ulsan, Pohang, Gangnam Research Team)2), Regional Economic Research Team3), Issue Credit & Reserves Team, Cash Processing Team4)
ng & Administration Audit Team, Policy Making & Operation Audit Team, Foreign Reserve Management & International Business Audit Team, Research & Statistics Audit Team, IT
& Gyeongbuk, Gwangju & Jeonnam, Daejeon, Sejong & Chungnam, Gangwon, Jeju, Gyeonggi 3)Mokpo, Jeonbuk, Chungbuk, Incheon, Gyeongnam, Gangneung, Ulsan, Pohang 4)
2. Minutes of the Monetary Policy Board Meeting
QR BOX
QR 1 QR 2
Minutes of the Monetary Minutes of the Monetary
Policy Board Meeting Policy Board Meeting
(January 2022) (February 2022)
QR 3 QR 4
149
Appendix
(April 2022) (May 2022)
QR 5 QR 6
(July 2022) (August 2022)
QR 7 QR 8
(October 2022) (November 2022)
3. Contributing Departments & Authors by Section
Section Author
1. Real Economy
A. Global Economy Research Dept. Park, Seijoon
Lee, Seung Joo
B. Domestic Economy Research Dept. Park, Seong Ha
Lee, Gyuhwan
Lee, Hyekyoung
Lee, Seung Ho
Han, Chaesoo
Choi, Yeolmae
Kim, Hyerim
150 Lee, Hyeonseo
A. International Financial Markets International Dept. Kwon, Na Eun
B. Domestic Financial Markets Financial Markets Dept. Ryu, Chang Hoon
Park, Dayeon
International Dept. Lee, Seung Woo
Jeong, Dayoung
Ⅱ. Bank of Korea’s Conduct of Business

1. Development and Implementation of Strategy & Coordination Dept. Bae, Suk Jin
Strategies
2. Monetary Policy
A. Inflation Target Research Dept. Chae, Minsok
B. Base Rate Monetary Policy Dept. Jung, Dongjae
C. Open Market Operations Financial Markets Dept. Dang, Uijeung
D. Lending and Deposit Facilities Monetary Policy Dept. Mun, Dong Gyu
Payment & Settlement Dept. Kang, Tae Heon
Jung, Young Suk
Jung, Joonyoung
Han, Jung Hee
E. Monetary Policy Communication Monetary Policy Dept. Jung, Dongjae
Monetary Policy Board Secretariat Lee, Yejee
Communications Dept. Go, Minji
Kim, Hyeong Jun
A. A nalysis and Assessment of Financial Stability Dept. Jung, Chun Soo
Macroprudential Stability Yoo, Hyun Joo
Lee, Haein
Lee, Sungyup
Lee, Jung Kook
B. F
inancial Market Stabilization Financial Markets Dept. Dang, Uijeung
Measures Monetary Policy Dept. Mun, Dong Gyu
C. Foreign Exchange Market Stabilization International Dept. Bae, Jun Ho
Measures
D. E
xpansion of Multilayered Financial International Affairs Dept. Kim, Bo Keong
Safety Nets
E. O
peration of an Emergency Response Financial Markets Dept. Ryu, Chang Hoon
System in Anticipation of Financial Insta- Park, Dayeon
bility Factors
Section Author
A. Issuance Currency Dept. Jang, Seok Hwan
Kang, Seokchang
Lee, Chang Min
B. Circulation Currency Dept. Lee, Chang Min
Hwang, Hu Nam
Bae, Jung Min
C. External Cooperation Currency Dept. Lee, Chang Min
Jang, Seok Hwan
Lee, Byeongrok
A. Operation of BOK-Wire+ Payment & Settlement Systems Dept. Kim, Duckhyung 151
B. Oversight and Risk Management Payment & Settlement Systems Dept. Kim, Duckhyung
Appendix
C. Improvement of Payment and Settle- Payment & Settlement Systems Dept. Kim, Duckhyung
ment Systems
D. International Cooperation Payment & Settlement Systems Dept. Kim, Duckhyung
6. Foreign Exchange and International

Cooperation
A. Foreign Exchange International Dept. Lee, Seung Woo
Jeong, Dayoung
Kim, Ji Hoon
B. Reserve Management Reserve Management Group Choi, Jung-Eun
C. International Cooperation International Affairs Dept. Kim, Bo Keong

A. Research Activities Research Dept. Cho, Byoung Soo
Jin, Hyong Tae
Jung, Young Cheol
B. Compilation of Statistics Economic Research Institute Kim, Min Jung
Strategy & Coordination Dept. Kim, Soo Lim
Economic Statistics Dept. Oh, Kwon Young
Lee, Da Yeon
A. Treasury Office of Banking Operations Cheon, Jae Jung
B. Securities Office of Banking Operations Cho, Young Hwa
C. Fund Management Office of Banking Operations Cho, Young Hwa
A. Strengthening Communications Communications Dept. Go, Minji
Kim, Hyeong Jun
Seol, Bumyoung
Chung, Yoo Jin
Strategy & Coordination Dept. Gwon, Taehyo
B. S
trengthening Economic and Financial Office of Economic Education Kim, Youn Kyeong
Education
Section Author
Ⅲ. Management Status
A. Organizational Structure Strategy & Coordination Dept. Yu Ri
B. Organizational Management Methods Strategy & Coordination Dept. Yu Ri
Min, Da Han
C. Education and Training Bank of Korea Academy Kim, Hyunhee
D. Human Resources Operation Human Resources Dept. Noh, Jungwoo
E. E xpansion of Corruption Prevention Office of Compliance & Ethics Lim, Su-Run
and Culture of Integrity
F. S
trengthening of Job Expertise and Office of Digital Innovation Cho, Chun Hee
Effectiveness through Digital Innovation
152 G. Improvement and Expansion of IT Information Technology Dept. Kim, Sang Myung
Systems
H. Construction of an Integrated Annex Construction Project Management Office Lee, Saerom
2. Financial Status Strategy & Coordination Dept. Cha, Jeon Yeong

Park, Sang Eun
Appendix
1. Overview of Bank of Korea
(1) History and Mission Monetary Policy Dept. Ahn, Jihoon
(2) Organization
A. Monetary Policy Board Monetary Policy Board Secretariat Lee, Yejee
B. Executive Officers and Auditor Secretariat Son, Dal Ho
C. Departmental Organization and Strategy & Coordination Dept. Yu Ri
Responsibilities
D. Organization Chart of Bank of Korea Strategy & Coordination Dept. Yu Ri
2. Minutes of the Monetary Policy Board Monetary Policy Board Secretariat Lee, Yejee
Meeting
3. C ontributing Departments&Authors by Communications Dept. Kim, Hyeong Jun
Section
Planning and Coordinating Communications Dept. Kim, Bong Ki

Go, Minji
Kim, Hyeong Jun
2022 Annual Report
Publisher Rhee, Chang Yong

Editor Kim, Je Hyun
Published by Bank of Korea
39, Namdaemun-ro, Jung-gu, Seoul, 04514, Korea
www.bok.or.kr
Published on July 7, 2023
Printed by Jeil Printech Co., Ltd.
his material is posted on the web-site of Bank of Korea

(http://www.bok.or.kr > Research Papers > Periodicals > Annual > Annual
Reports)
Please contact Communications Strategy & Coordination Team,

Communications Department, Bank of Korea(Tel: +82-2-759-4649,
publicinfo@bok.or.kr)
Copyright © BANK OF KOREA. All Rights Reserved

ISSN 0067-3706
2023. 7
ISSN 0067-3706
2022
2022 Annual Report

Annual Report
2023. 7

2022 Annual Report

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2023.

2022 Annual Report

Article 102 (Publication of the Annual Report)

② The annual report in Paragraph(1) shall be approved by a resolution of

As the central bank responsible for implementing Korea’s monetary

In 2022, the Korean economy encountered significant challenges due

Against this backdrop, the Bank of Korea implemented its monetary

The Bank of Korea further enhanced its research capabilities in order

In addition, the Bank bolstered its external communication efforts

Chairman Rhee, Chang Yong

2. Financial and Foreign Exchange Markets 17

II. Bank of Korea’s Conduct of Business 27

1. Development and Implementation of Strategies 31

5. Payment and Settlement Business 59

6. Foreign Exchange and International Cooperation 66

7. Research and Statistics 78

8. Treasury and Securities Business 90

III. Management Status 105

1. Organization Management 107

2. Financial Status 119

1. Overview of Bank of Korea 139

2. Minutes of the Monetary Policy Board Meeting 149

3. Contributing Departments & Authors by Section 150

Box II-2. Overhaul of the Bank of Korea’s Economic Statistics

Box III-1. Bank of Korea’s Management and Personnel

Box III-2. Characteristics of the Bank of Korea’s Financial

Tab. I- 4. Growth in Wage Indicators 12

Tab. I- 5. Rate of Increase in Housing Prices and Housing

Tab. I- 6. Exports by Major Item 14

Tab. I- 7. Imports by Major Item 15

Tab. I- 8. Major Indicators by Region 16

Tab. I-10. Deposits at Financial Institutions 23

Tab. I-11. Loans by Financial Institutions 24

Tab. II- 1. Summary of Medium-Term Strategies in 2022 31

Tab. II- 2. Scale of Liquidity Adjustment via Open Market

Tab. II- 3. Loans of Bank of Korea 35

Tab. II- 4. Deposits with Bank of Korea 36

Tab. II- 5. Adjustment of Bank Intermediated Lending Support

Tab. II- 6. Bank of Korea’s On-site Joint Examination 44

Tab. II- 7. Financial Market Stabilization Measures in 2022 48

Tab. II- 8. Current Status of Korea's Currency Swap Agreements 50

Tab. II- 9. Banknotes and Coins Issued, Withdrawn, and

Tab. II-10. Production of Banknotes and Coins 53

Tab. II-13. Net Transactions by Foreign Exchange Authorities 66

Tab. II-14. Composition of Foreign Exchange Reserves 67

Tab. II-15. Percentage Shares in Foreign Assets 69

Tab. II-16. Use of Domestic Financial Institutions in Reserves

Tab. II-17. Investment in ESG-Related Assets 71

Tab. II-18. Main Themes of International Forums 73

Tab. II-20. BOK-Knowledge Partnership Program (KPP) 75

Tab. II-21. Central Banking Study Program (CBSP) 76

Tab. II-22. Subscriptions & Contributions to International Financial

Tab. II-23. Loans to IMF 77

Tab. II-24. Receipts & Disbursements of Treasury Funds 90

Tab. II-25. Status of Treasury Agencies & Receipts Value 91

Tab. II-26. Treasury Network Transactions 92

Tab. II-28. Issuance & Redemption of Korea Treasury Bonds 93

Tab. II-29. BOK’s Government Fund Management Business 94

Tab. II-30. Fund Management and Operation 95

Tab. II-31. Visitors to BOK’s Main Website 97

Tab. II-32. Social Media Operated by BOK 98

Tab. II-33. Visitors to BOK Money Museum 98

Tab. II-34. Number of Complaints Processed 98

Article 102 (Publication of the Annual Report)

② The annual report in Paragraph(1) shall be approved by a resolution of

Tab. I- 5. Rate of Increase in Housing Prices and Housing

Tab. II- 2. Scale of Liquidity Adjustment via Open Market

Tab. II- 5. Adjustment of Bank Intermediated Lending Support

Tab. II- 9. Banknotes and Coins Issued, Withdrawn, and

Tab. II-16. Use of Domestic Financial Institutions in Reserves

Tab. II-22. Subscriptions & Contributions to International Financial

Tab. III- 3. Objectives and Tasks of the 10th Digitalization and

Fig. I-20. Stock Indexes of Major Advanced Economies & MSCI

Fig. I-24. Exchange Rate, Nominal Effective Exchange Rate Index

Fig. II- 3. Scale of Liquidity Adjustment via Open Market

Fig. II- 4. Bank Intermediated Lending Support Facility Ceiling and

Fig. II- 5. Financial Stress Index(FSI) and Financial Vulnerability

Fig. II-10. External Debt-to-Nominal GDP Ratio and Short-Term

Fig. II-14. Poster Promoting the Guarantee of the Right to

Fig. II-21. Provision of Private Map Platform Information after

Fig. II-24. Korean Statistical Society - BOK Joint Forum 87

Fig. II-31. BOK Friday Lecture: Special Lecture by Monetary Policy

Fig. II-32. Lecture by Governor Rhee Chang Yong at the

Fig. III- 1. Town Hall Meeting 108

Fig. III- 2. Operational Risk Management Structure of

Fig. III- 5. Objectives of Restructuring the Management and