Book contents
- Monetary Policy and Central Banking in Korea
- Monetary Policy and Central Banking in Korea
- Copyright page
- Dedication
- Contents
- Figures
- Tables
- Boxes
- Preface and Acknowledgements
- Abbreviations
- Part I What Is the Goal of Korean Monetary Policy?
- Part II How Does Money Affect the Korean Economy?
- Part III How Is Monetary Policy Conducted in Korea?
- 4 The Organisation and Functions of the Bank of Korea
- 5 The Monetary Policy Strategies of the Bank of Korea
- 6 Inflation Targeting in Korea
- 7 The Tools and Instruments of Monetary Policy
- 8 Monetary Policy without Money
- 9 Foreign Exchange Market Intervention and Monetary Policy
- Part IV How Is Financial Stability Pursued in Korea?
- Part V What Will Be the Challenge for Future Monetary Policy in Korea?
- References
- Index
8 - Monetary Policy without Money
from Part III - How Is Monetary Policy Conducted in Korea?
Published online by Cambridge University Press: 17 February 2022
- Monetary Policy and Central Banking in Korea
- Monetary Policy and Central Banking in Korea
- Copyright page
- Dedication
- Contents
- Figures
- Tables
- Boxes
- Preface and Acknowledgements
- Abbreviations
- Part I What Is the Goal of Korean Monetary Policy?
- Part II How Does Money Affect the Korean Economy?
- Part III How Is Monetary Policy Conducted in Korea?
- 4 The Organisation and Functions of the Bank of Korea
- 5 The Monetary Policy Strategies of the Bank of Korea
- 6 Inflation Targeting in Korea
- 7 The Tools and Instruments of Monetary Policy
- 8 Monetary Policy without Money
- 9 Foreign Exchange Market Intervention and Monetary Policy
- Part IV How Is Financial Stability Pursued in Korea?
- Part V What Will Be the Challenge for Future Monetary Policy in Korea?
- References
- Index
Summary
>Monetary policy is no longer the decisions to determine money, but just to decide on the short-term interest rates. Notwithstanding this, old principles consider these decisions as being equivalent, based upon the negative correlation between the bank reserve and the interest rate in the money market. Moreover, the BoK staff had a firm belief that the open market operation in the money market was the most desirable policy tool. In practice, however, the interest rate is neither determined by the interplay of demand and supply in the money market, nor is the open market operation an indispensable instrument, given the increasing role of the standby facility. This chapter examines the determination of the short-term interest rate under the 'corridor' system
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- Monetary Policy and Central Banking in Korea , pp. 186 - 210Publisher: Cambridge University PressPrint publication year: 2022