Seoul: South Korea should improve its legal and institutional framework in a direction that strengthens the Bank of Korea's (BOK) role in macro prudential policy decisions, the central bank chief said Wednesday.

According to Yonhap News Agency, BOK Gov. Rhee Chang-yong made the remarks in a keynote address at a Seoul conference jointly hosted by the Asia Development Bank and the Journal of International Money and Finance. Rhee highlighted the BOK's lack of direct macro prudential policy tools and supervisory authority over the micro-economy, contrasting it with other major economies.

Rhee emphasized that this limitation could hinder swift and effective policy responses, especially when disagreements arise between the government and the bank regarding policy directions and intensity. His remarks align with the BOK's ongoing call to expand its role beyond merely setting the country's base interest rate, as it currently lacks other policy tools to preemptively address financial uncertainties.

The BOK has reportedly submitted a proposal to the government, suggesting that it should assume some regulatory powers currently held by the Financial Services Commission. This would include the authority to inspect banks and other financial institutions.