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[Vol.26 No.3] The Bank of Korea Act Enacted as an Apparatus for Modern Central Banking: A Review and Evaluation

Group : Macro Economy
Economic Research Institute (82-2-759-5490) 2020.09.29 1568

Authour: Hong-Bum Kim(Gyeongsang National Univ.)

<Abstract>

The Bank of Korea began its operation on June 12, 1950, with the Bank of Korea Act established a month or so earlier. Thus was first introduced to Korea modern central banking in the real sense of the word. The Bloomfield Mission, consisting of A. Bloomfield and J. Jensen of the Federal Reserve Bank of New York, spent about six months drafting a bill, which finally became the Bank of Korea Act. Little has been known yet about the process leading to the creation of the Mission and the historical context surrounding it, except that F. Tamagna of the Federal Reserve Board made in his capacity of the ECA’s representative the offer of technical assistance to the Korean government. This paper attempts to dig deeper into relevant historical records and literature to fill these gaps. As it happened, the confrontation between the US and the USSR was accelerating towards the end of 1940s. The paper’s new findings include that the Bloomfield Mission was, together with the ECA Mission to Korea, a product of the then US foreign policy (Cold War policy) and that the former Mission’s technical assistance was conceived and provided all along as part of the inflation stabilization program pursued by the latter Mission. The Bloomfield Mission was after all a historical necessity. Next, the paper examines the changes added to the bill during its journey to becoming the Bank of Korea Act enacted in May 1950, presenting a review of the Act. The paper further evaluates the Act in terms of legal persistence, finding that the revised Act currently in force still substantially resembles the Act enacted 70 years ago from now. Finally in order is a brief discussion on those factors which seem to have contributed much to such persistence and thus apparent excellence of the Act enacted.

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