Emerging economies of the world should shift to more domestic demand-driven growth in order to push the global recovery forward, South Korea’s central bank governor said.

In a speech made at Goethe University in Germany on Monday, Kim Choong-soo stressed that in order for the world to pull off sustainable growth and maintain financial stability, there is a need to forge closer international economic cooperation between emerging and advanced market economies.

He added that for the world to move ahead emerging market economies need to play a greater role.

The Bank of Korea (BOK) chief said emerging economies need to shift from external demand-driven growth to a more domestic centered growth. He said that this latter type of growth will not only be less prone to drive a buildup of global imbalances but also contribute more to overall economic growth.

For advanced market economies, the BOK governor said there is a need to strive for fiscal balance with central banks needing to take steps to retrieve excessive liquidity in the market.

He added that in the long run, central banks from around the world can take steps to form an “International Monetary Policy Committee” suggested by scholars that can serve as a mechanism for evaluating the overall effects of monetary policies and introduce multilateral guidelines to safeguard against financial sector breakdowns.

Kim’s speech was attended by members of the European Central Bank, Germany’s Bundesbank and academicians. The governor, meanwhile, will fly to Washington to take part in the Group of 20 finance ministers and central bankers meeting slated for Thursday and Friday. 

(Yonhap News)