List
Supporting the Green Transition
We are exploring policy tools to reduce the transition burden on SMEs and ways to develop a market for green finance.
The financial sector, including green finance, is essential for companies to secure long-term investment for the green transition. Achieving carbon neutrality is a long-term project expected to deliver economic benefits exceeding costs by around 2040. Strengthening incentives for an environmentally friendly financial system is crucial for promoting green finance. Major economies, like the U.S. with its Inflation Reduction Act (IRA) and the European Green Deal, are heavily investing in green industries to transition to a low-carbon economy. Korea must also secure stable capital and foster strategic partnerships between government, industry, and the financial sector to support technological innovation and the green transition. The Bank of Korea is collaborating with the government and financial institutions to develop effective policies for green finance and is researching monetary policy tools for this purpose. Additionally, the Bank is expanding ESG investment in response to growing public demand for responsible investment.
Policy Recommendation to Promote Green Finance
The Bank of Korea proposes research based policy to promote green finance. It shares expertise and discusses effective policies with various climate-related bodies, including the Presidential Commission on Carbon Neutrality and Green Growth, and financial authorities, focusing on supporting green finance for climate-vulnerable SMEs.
Exploring the Potential Use of Monetary Policy Instruments
The Bank of Korea continues to explore monetary policy tools suited to Korea’s conditions, drawing from climate change responses of major central banks.
The Expansion of ESG Management for Foreign-exchange Reserves
The Bank of Korea aims to enhance public responsibility in asset management by increasing ESG investments in foreign exchange reserves and preserving asset values over the mid to long term. The Bank continuously purchases ESG-related bonds, applies negative screening to all foreign currency assets, and is considering adopting an ESG integration strategy for the entire asset management process.