Monday, March 24th, 2014
SEOUL, KOREA - The Bank of Korea's debt is rising at a rapid clip. The central bank said on March 20 that its debt level as of the end of 2013 was 448,399.3 billion won, up 3.1 percent from a year ago.
This is 45.8 percent higher than five years ago at the end of 2008 when the comparable figure was 140,954.8 billion won. During the same period, household credit has bloated 41.2 percent to 1,021,338.3 billion won from 723,521.5 billion won at the end of 2008.
By type of debt held by the Bank of Korea as of the end of last year, currency stabilization bonds took the largest share with 163,654.1 billion won (36.5%), followed by deposits held by commercial banks (129,884.2 billion won; 29.0%), other debts (71,163.7 billion won; 15.9%), and currencies (63,365.9 billion won; 14.1%).
As the Bank of Korea is not classified as a state-run enterprise, the debt volume it holds is not counted as part of the public sector debt. When the Ministry of Strategy & Finance announced the public sector debt level in February this year under a new frame of definitions, a controversy erupted as to whether to include currency stabilization bonds into the debt counting.
LG Economic Research Institute research fellow Cho Young-mu said, "In some European countries central bank is defined as part of the public sector because if central bank debt rises the overall quantity of money rises as well due to an increase in interest payments on currency stabilization bonds at a time the government must resort to a tight-money policy."