Bank of Korea Governor Rhee Chang-yong has expressed a view in favor of targeted assistance over universal support in the upcoming second supplementary budget.

At a press briefing on the inflation target review held at the Bank of Korea on Wednesday, Rhee stated that targeted support is a “more effective” way to assist struggling micro business owners and the self-employed “from a fiscal efficiency standpoint.”

He added, however, that he could not fully assess the proposal without having seen the details agreed upon by the ruling party and the government.

His latest remarks reaffirm a stance he has maintained since earlier this year, when he supported selective support during a political debate over whether supplementary budget payments should be universal or targeted.

The presidential office had considered income-based targeted support in light of fiscal constraints but the ruling party and government later reached a consensus to pursue universal payments.

Rhee also addressed the impact of the proposed second extra budget, estimated at around 20 trillion won ($14.6 billion).

“Fundamentally, since our economy is not in a good state, expanding the supplementary budget greatly contributes to growth,” he said.

However, regarding its impact, he added that “I’ve long believed that while it significantly contributes to growth, its effect on inflation will not be substantial.”

Deputy Governor Kim Woong added that assuming a supplementary budget of about 20 trillion won, its impact on inflation this year will be limited.

“The impact on next year’s inflation will be about 0.1 percentage point,” Kim said.

Regarding market speculation that a sharp rise in housing prices could delay the timing of an interest rate cut, Rhee maintained a cautious stance, saying that “the decision will be made while monitoring market conditions.”

“We will look at household debt, the housing and foreign exchange markets,” Rhee said. “While the BOK will base its rate decisions on the state of the economy, we must not make the mistake of excessively injecting liquidity and thus inflation expectations.”

Rhee also touched on the topic of stablecoins, saying he sees the need for a won-based stablecoin and does not oppose its issuance. However, he voiced concern that “if a won-based stablecoin is issued, it could make it easier to exchange for dollar-based stablecoins, increasing demand for those and potentially complicating foreign exchange management.”

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