The Bank of Korea (BOK) and the financial authorities here should reveal specific timelines for their plan to retrieve massive anti-coronavirus liquidity supplied to the market, as a lack of such details may end up causing medium- to long-term market confusion here, a former foreign investment ombudsman said in an interview.

Jeffrey In-chul Kim, now a professor emeritus at Sungkyunkwan University, voiced the need for the central bank to make public its plans as early as possible, as the local currency is not a global reserve currency such as the U.S. dollar.

“Speculation will run more and more rampant in the market unless the central bank makes timely announcements over how and when to retrieve the supplied liquidity for the economy’s mid- to longer-term recovery,” Kim told The Korea Times, Friday.

“Some developed countries ― such as the U.S. ― have in recent months pushed for supplying an unlimited amount of liquidity to the market against the virus-induced economic downturn, but they can do so because international currencies run low inflation risks. But this is not the case for the Korean won,” the economist said.

Following a recent decision by the U.S. Federal Reserve, the BOK also took a similar step to provide unlimited liquidity to financial institutions here, in a move to rev up the sagging economy.

The unprecedented decision reflected on growing concerns over the economic downturn here in the wake of the COVID-19 pandemic and prolonged low interest rate.

The central bank and the financial authorities have expanded market liquidity to 53 trillion won particularly by purchasing bonds.

“It is a misunderstanding that the economy will necessarily bounce back if authorities expand liquidity,” he said. “The point is to supply the liquidity to the areas in desperate need of capital.”

“For the nation’s fiscal soundness, the financial authorities will soon put an end to the liquidity expansion policy,” he said. “But they need to announce the retrieval plans in advance, so the market is not disrupted due to possibly ensuing speculation over its liquidity retrieval.”