The Bank of Korea has decided to stop publishing the monthly "global foreign exchange reserves ranking," which it has released since February 2001, making it confidential after 25 years. The reason is that the ranking has been used to attack or defend the government, sparking unnecessary debates or creating distorted perceptions. The Bank of Korea says the ranking of foreign exchange reserves has nothing to do with external soundness, so withholding the data poses no problem.
But some say the Bank of Korea made an overly defensive decision to avoid criticism. While the ranking does not accurately reflect external soundness, it is true it served as an intuitive indicator of how Korea's foreign exchange reserves compare with other countries. There are also claims the decision was made because the foreign exchange reserves ranking has fallen.
◇ "Data that should not have been released in the first place"
On the 3rd, when distributing a press release on foreign exchange reserves, the Bank of Korea omitted the "foreign exchange reserves of major countries" data it had previously provided. The data included the size of foreign exchange reserves for major countries such as China, Japan, and Taiwan, as well as Switzerland, Russia, and Germany. It allowed a quick view of Korea's ranking in foreign exchange reserves.
The data is understood to have been published since February 2001. After Korea received a bailout from the IMF during the 1998 foreign exchange crisis, the comparison data was likely provided to ease public anxiety. In particular, in 2001, foreign exchange reserves rose sharply and Korea climbed to No. 5 in the world, so the ranking was used for external promotion. In December 2001, then-President Kim Dae-jung also said at a luncheon hosted by the Confederation of British Industry that "we have become the world's No. 5 foreign exchange reserve holder." A Bank of Korea official said, "We may have decided to publish it going forward after checking major countries' foreign exchange reserves and finding the ranking was high."
The Bank of Korea says it made the data confidential after 25 years because it has become fodder for political fights in and outside the political sphere. When the ranking fell, it was used to criticize the authorities, and when it rose, it was used to defend the government.
The Bank of Korea's position is that the ranking of foreign exchange reserves is unrelated to external soundness. The appropriate level of foreign exchange reserves is determined by a country's economic size and level, and comparing only reserve amounts without considering such conditions should not be done. In fact, other countries such as the United States and Japan do not separately publish foreign exchange reserves rankings. A Bank of Korea official said, "Saying there is a problem because the ranking goes down or feeling proud when it goes up both make no sense," adding, "foreign exchange reserves rankings were information that should not have been included from the start."
◇ "A move to prevent anxiety as the ranking falls"
The Bank of Korea plans to disclose only the amount and trend of foreign exchange reserves going forward. As of the end of Aug., it was $442.28 billion, but there is no longer a way to grasp at a glance what level that represents. To compile comparisons, one must check directly on the IMF or major countries' Central Bank websites. Unless you are an academic researcher or expert, even a simple assessment has become difficult.
Some say the Bank of Korea made the data confidential to preemptively block public anxiety as the foreign exchange reserves ranking declined. Korea's foreign exchange reserves ranking fell from No. 6 in 2008 to No. 10 at the end of last year. On the 3rd, it slipped to No. 12, but in June it rose back to No. 10 and has held that level. Kim Jeong-sik, a professor in the Department of Economics at Yonsei University, said, "Not announcing the ranking is not a big problem," but added, "it looks like a measure to prevent psychological anxiety as the foreign exchange reserves ranking has fallen."
Regarding this, the Bank of Korea said, "It is not true that we deleted the foreign exchange reserves ranking to hide information disadvantageous to the foreign exchange authorities," adding, "the foreign exchange reserves ranking is already public data that statistics users can freely look up."