Chapter 326 on the importance of central bank independence

Park Xilai was very proud, very proud, with a spring breeze on his face. In the past two days, even the aunt who was cleaning was rarely greeted with warmth, and his attitude was so nasty that others could not bear to look directly at him. The cleaning aunt who could be called an old woman wondered if the CEO had taken a fancy to her.

   It’s no wonder that the peninsula nation’s character is always inferior and arrogant. This complex national character leads Koreans to have many unrealistic ideas. Driven by this kind of national character, Korean talents later filmed many Korean dramas with **** scenes of "a black chicken turns into a phoenix".

  Auntie Cleaning specially spent a lot of money on hair and beauty treatments, hoping that the president would be more pleasing to the eye. She even once had the idea of ​​a face lift, but she gave up because the cost was too high.

  Since the Bank of Korea's undisguised intervention in the Korean won foreign exchange market, the wind direction of the entire market has changed, and the number of Korean won buyers has increased significantly. Because of the backing of the Bank of Korea, they have no scruples to take the exchange rate difference, and the transaction volume of Korean won has increased significantly.

Under such circumstances, although the number and intensity of corresponding selling orders in the market have increased significantly, after the two-pronged approach of Korean won buyers and the Bank of Korea, the Korean won exchange rate has been pushed up step by step. By November 11, the Korean won has already It rises to within the 980 range, and after breaking away from the 990 range, it is far away from the important psychological threshold of 1 US dollar to 1,000 won.

  Although a lot of foreign exchange reserves were used up, Park Hee Lai felt it was worth it.

In reports similar to the "Wall Street Journal", "Financial Times", "Washington Post" and Bloomberg, the figure of South Korea's foreign exchange reserves ranges from 30 billion US dollars to 50 billion US dollars, and sometimes the reported figure is even lower than that of Thailand. , and South Korea itself has not publicly announced how much it has foreign exchange reserves, which has caused the market to remain unclear about the amount of South Korea's foreign exchange reserves.

In fact, in addition to the requirement of the International Monetary Fund to maintain foreign exchange reserves for three months (Korea’s 36 billion U.S. dollars), the Bank of Korea has a foreign exchange deposit of as much as 30 billion U.S. dollars. As high as 66 billion US dollars.

   Even if this number is placed on a global scale, it is still a number that can be ranked in the top ten. This is one of the reasons why Park Hee Rae is full of confidence.

Over the past few days, a total of more than 22 billion US dollars of foreign exchange reserves have been used, and finally the South Korean won has been pulled back from the downward trend in one fell swoop. Openly intervening in the foreign exchange market gave him a sense of power.

"Hmph, it's because the consortium behind them saw the consequences of the continued depreciation of the Korean won, so they had to instruct these old guys to agree with me to publicly intervene in the market. After all, watching the debts they bear increase day by day is not good. It's good!"

  In the spacious office, Park Xilai was holding a thumb-thick cigar, and cheerfully said to his number one confidant Xu Youtian.

  He sees very clearly that the members of these committees do not have their own opinions. To be honest, those people are just politicians and agents who rely on the old to sell the old. How do they know anything about academics or the laws of economic operation? To put it bluntly, they are nothing more than mouthpieces.

  Xu Youtian nodded silently. He communicated with the members of the committee in private. Although he was ordered by Park Xilai, but now the entire credit is on Park Xilai. After all, he felt a little uncomfortable.

However, he quickly abandoned this idea. After all, he was not the one sitting in that position. After suppressing his smile, Xu Youtian said to Park Xilai seriously: "Mr. President, should we strike while the iron is hot? Consolidate the previous achievements? After all, yesterday was a rest day for the United States, if the United States sells aggressively today regardless of the market, we will still be under a lot of pressure."

"Um!"

Park Xilai nodded, looked at Xu Youtian approvingly, exhaled a thick smoke from his mouth, and said, "Youtian, I will leave this task to you. After the matter is over, I will definitely promote you. This time Thanks to you, otherwise I don't know what the situation is now!"

  Even though he knew that his boss's words were not reliable, Xu Youtian showed an excited expression very cooperatively, and thanked him with a trembling voice: "Thank you, President, I will definitely do my best and die."

  Due to the long-term influence of Chinese culture, especially in the upper class of ancient Korea, everyone is proud to be able to speak Chinese or Chinese idioms. Although in order to de-Chinese, the Koreans forcibly created the current characters, but the pronunciation of many words still adheres to the Chinese accent. For example, "Republic of Korea" in Korean, if you listen carefully, it is completely pronounced in Chinese, but Koreans split it into Chinese characters and piece together a new language system.

  Even though it has been de-Chinese for a long time, Chinese language is still a symbol of their status and class among some highly educated scholars or the so-called upper class. And people like Xu Youtian, who are single-minded about squeezing into the upper class, naturally learned a few Chinese idioms artfully.

Hearing Xu Youtian's statement, Park Xilai was very proud, and his face became a flower with a smile, but he said hypocritically: "Youtian, we are both alumni and fellow countrymen. What? Don’t say such things in the future, after all, we work in the government, and forming a party is a taboo.”

  Like other East Asian countries, Koreans also pay special attention to their origins, which can be alumni, fellow villagers, or even living in the same community. This is very strange, a Korean can be extremely cold and heartless towards strangers, but if there is a little connection, the attitude will change immediately.

   Xu Youtian is Park Hee-rae's junior at Seoul University, and he is also from the Busan area like him.

  Xu Youtian was so grateful that he burst into tears on the spot, choked up and said, "President Park, you are really... really kind to me, just like my reborn parents... No, even my biological parents are not as good as you!"

  Although the words were very nasty, and even a little cold, but Park Xilai was very helpful, and after a while, he waved his hand and signaled Xu Youtian to go out.

  Xu Youtian wiped away the tears all over his face, and bowed deeply at ninety degrees to Park Xilai, then faced Park Xilai's direction, and retreated step by step towards the door. But when he reached the door, he stopped again, rolled his eyes, took a deep breath, and said hesitantly: "President, there is something... Maybe you should know."

"Um?"

  Pu Xilai, who was on his head, was taken aback for a moment, and looked at Xu Youtian suspiciously, thinking that this subordinate actually had something to hide from him. Thinking of this, his look at Xu Youtian suddenly became unkind.

  Xu Youtian is also an extremely shrewd character. When he saw Park Hee Lai's appearance, he immediately understood what he was thinking. He quickly lowered his head and said with trepidation: "President, the thing is actually like this..."

It turned out that when Xu Youtian persuaded those old guys from the Finance and Currency Management Committee, not all of them agreed that the Bank of Korea would openly intervene in the foreign exchange market. Consider it. It's just that most of the old guys agreed to Park Hee Lai's proposal to openly intervene in the foreign exchange market after being encouraged by Xu Youtian's penetrating tongue and communicating with the consortium behind him.

   After finishing speaking, Xu Youtian drooped his head, as if resigned to disposition. Seeing this scene, Park Xilai didn't have the heart to blame him any more, so he just let him go out after a few words of comfort.

Speaking of which, Xu Youtian is also a little cautious. He has long disliked those old guys who eat vegetarian meals, but they are in high positions and rely on their elders to sell their elders. Even Park Xilai himself has to be scruples, let alone Xu Youtian himself up. This time, he just took this opportunity to put eye drops on those old fellows, waiting for an opportunity to take some revenge.

As the saying goes, "If you are not in your position, you will not seek your own government." In Xu Youtian's view, this is just a small incident, not even a disturbance, but Park Xilai, who has an exceptionally keen sense of smell, smells a conspiracy from it. There is no other reason, it is that the old guys that Xu Youtian said are all members of the opposition party.

  Although most of the Financial and Currency Management Committee of the Bank of Korea are agents of the consortium that followed Kim Young-sam to power, in order to balance power, there are also many agents of the consortium who bet wrongly in the Korean general election. This group of people usually don't take care of things very much, but Park Xilai, who knows their temperament well, knows very well that if this group of people don't take action, it will be a shocking event.

   Obviously, they have something brewing!

   But what could it be? After thinking for a long time, Park Xilai already had the answer in his mind, but the answer was too appalling and beyond his ability, so he could only look up to the sky and sigh, and fell down on the sofa without saying a word for a long time.

  What is it that makes the president of a country's central bank feel helpless? This starts with the independence of the Bank of Korea.

  Generally speaking, the central bank of a country needs to maintain relative independence in order to carry out monetary policy smoothly and continuously and maintain its continuity. Especially in markets where the economy is freer and more open, the demand for such independence is higher.

For example, a certain president of the United States had mediocre performance in his first term and the economy was in a mess. As a result, when the four-year term was coming to an end, he wanted to seek re-election. or a certain president, when his term of office is not long left, his head suddenly twitched, and he wanted to leave a good reputation in history, so under this background, he brazenly introduced a big plan to stimulate the economy. The large-scale infrastructure construction plan claims to invest 4 trillion U.S. dollars to build high-speed railways, steel factories, and aircraft manufacturing bases across the United States. In this way, the beneficiary associations and voters will definitely vote for the president, and he is very likely to be re-elected.

   It's politics!

   So what are the implications for central bank independence? The problem is that the scale of this investment is huge, and during the re-election campaign, it is impossible for any candidate to announce a tax increase policy to raise funds, so the remaining financing options are only the issuance of bonds and the printing of money. planted.

  These two schemes involve the central bank. If the central bank, the Federal Reserve, is not independent, it can only be forced to print money under the influence of such political factors. The result is soaring national prices and inflation. Both nominal and real prices will rise, which will eventually lead to people's dissatisfaction with the Fed's policies, demanding Greenspan's resignation, and so on.

And if the Federal Reserve has independence, then Greenspan and his colleagues can firmly reject this unrealistic investment plan, because they need to be responsible for the total amount of money and inflation in the United States, and do not need to report to the President responsible for something. And this hypothetical huge investment plan will also be aborted because of the financing channel being gambled.

  In fact, in addition to political factors, there are many other factors that can exert influence on the monetary policy of the central bank, but political factors have the greatest and most profound impact.

  In the final analysis, the biggest defense against maintaining the independence of the central bank is to prevent politicians from formulating economic policies indiscriminately.

Compared with western developed countries, the Bank of Korea just lacks this kind of independence, not only lacking, even before Park Xilai came to power, it did not have a corresponding independent status at all. Although it is still known as the central bank of South Korea, its top leaders are finance The minister serves concurrently, and the finance minister is nominated and appointed by the president. One person shoulders two responsibilities. How can there be any independence at all?

Even now, although Park Hee Lai instructed traders to openly intervene in the market, he did so with the approval of the Ministry of Finance. Once the decision of the Ministry of Finance was rejected or stopped by Congress, then even if Park Hee Lai wanted to protect Living in the Korean won, in the end he could only watch the Korean won float freely in the market.

   Once the protection of the Bank of Korea is lost, although there is still a daily fluctuation of 2.25%, Park Xilai is very clear that in today's general environment, this fluctuation may be broken down in a day, and it will be the death of the won!

The reality is that the Korean won dispute has become a partisan dispute, and judging from the performance of the old members of the opposition party in the Financial and Currency Management Committee, it is clear that they are going to do something to the Korean won and the Bank of Korea, and this behavior is Park Hee Rae couldn't stop it.

   This is the reason why he could only look up to the sky and sigh after he figured it out.

In fact, he misunderstood these people, thinking that they were simply dismantling the stage. In fact, the consortium behind these people was not only worried about the huge increase in debt due to the depreciation of the Korean won, but that according to the current exchange rate, these consortiums were afraid The Bank of Korea has no more dollars to sell for them to repay their debts because of their intervention in the market.

You must know that the debts of many Korean conglomerates are one-year. If they cannot buy a sufficient amount of US dollars from the Bank of Korea at the current exchange rate, they will be forced to buy them from the foreign exchange market after the Bank of Korea is unable to protect the market. Into the dollar, which they absolutely do not want to see.

Some consortiums want the support of the Bank of Korea, while another part of the consortium opposes the support with the mentality of "dead friends will not die poor people". It seems contradictory, but in fact they are all selfish and self-interested behaviors. The forces of both sides will be in Korea. There was a contest in Congress.

  Park Hee Rae can only do nothing!

On this day, the Korean won closed at 988.80 won to 1 US dollar in the Asian trading session, an increase of about 0.1 percentage points from the previous trading day. The exchange rate of the Korean won was once raised to 982.50 won to 1 US dollar due to the strong intervention of the Bank of Korea. , but the price dropped by 6 won under the selling of the United States.

Although the situation is good, the market is still cautious about the exchange rate of the Korean won, because the level of the forward exchange rate contract is still falling. At the level of 1220/1260, the forward exchange rate discount is obvious, which shows that the market is not optimistic about the long-term market confidence in the Korean won.

  (end of this chapter)