Experts Divided on the Effectiveness of Lee Jae-myung's Local Currency Pledge

[Financial News] Experts are divided over the expected policy effects of one of Lee Jae-myung's key pledges, the nationwide expansion of local currency. 
According to the political circles on the 27th, candidate Lee stated at a focused campaign rally at Pyeongnae-Hopyeong Station in Namyangju, Gyeonggi Province the previous day, "I will issue some local currency to force the circulation of money," and "I will quickly and strongly implement it by priming the pump with government fiscal expenditure to get the dried-up pump working and water flowing."
As the People's Power Party and reformist candidate Lee Jun-seok raised the level of political attacks on Lee's economic pragmatism, such as 'hotel economics,' Lee actively responded by stating that expanding government fiscal expenditure is basic economics for 'financial congestion.'
On the same day, the Democratic Party's Election Strategy Committee's Livelihood Recovery Headquarters also signed policy agreements with 18 livelihood organizations including the Korea Federation of Small Merchants and Self-Employed Entrepreneurs. The Livelihood Headquarters also announced plans to promote the expansion of the local currency budget as a major policy task, thereby supporting Lee's local currency pledge.
Encouraging participation in the local currency usage challenge at the Central Election Strategy Committee meeting held at the Yeouido Central Party Headquarters on the 21st was also in the same context.
However, there is a division of opinions among economic experts regarding the effectiveness of the pledge. 
Kang In-soo, a professor of economics at Sookmyung Women's University, argued, "It is not guaranteed to be as successful as in Gyeonggi Province," adding, "While Gyeonggi has an extremely high fiscal independence, other regions do not, and they will inevitably have to rely heavily on the central government."
In contrast, Woo Seok-jin, a professor of economics at Myongji University, positively evaluated it as "the only practical solution to revive local businesses that are currently starving, even if it's not efficient."
Professor Woo further added, "The current issue is not the overall low consumption, but the particularly low sales of small businesses in every alley," and "Since the government cannot directly increase sales by visiting every alley, the solution is to give money directly to households and tell them 'you go and spend it.'"


whywani@fnnews.com Reporter Hong Chae-wan