The primary purpose of the Bank is to pursue price stability.

Under the Bank of Korea Act (Article 1), the primary purpose of the Bank of Korea is pursuing price stability so as to contribute to the sound development of the national economy. The Bank of Korea implements this target through adjustments to its reference interest rate, the Base Rate.

The purchasing power of money depends on prices. When prices rise, the same amount of money buys less than before. Therefore, it is naturally the task of a central bank to safeguard the value of the money by keeping inflation low.

Prices are influenced by various factors such as corporate investment, household consumption and international prices of raw materials. Meanwhile, among the various policy instruments to bring about price stability, the monetary policy of a central bank, which adjusts the quantity of money in circulation, is the most effective.

For these reasons, the responsibility for price stability is given to central banks in most countries. The Bank sets and announces an inflation target for a certain period and strives to meet this target. The 2016–18 target is consumer price inflation of 2.0%.

At the apex of the Bank of Korea's organization is the Monetary Policy Committee (Geumnyung Tonghwa Wiwonhoe). The Committee's prime function is the formulation of monetary and credit policies. In addition, the Committee deliberates and resolves on major matters concerning the operations of the Bank of Korea.

The Monetary Policy Committee is composed of seven members representing various groups in the national economy:
199 the Governor, ex officio;
299 the Senior Deputy Governor, ex officio;
399 one member recommended by the Minister of Strategy and Finance;
499 one member recommended by the Governor;
599 one member recommended by the Chairman of the Financial Services Commission;
699 one member recommended by the Chairman of the Korea Chamber of Commerce & Industry;
799 one member recommended by the Chairman of the Korea Federation of Banks.
The members are appointed by the President for four-year terms except the Senior Deputy Governor whose term is three years and are eligible for reappointment. All members serve on a full-time basis and no member may be discharged from office against his will. The Governor serves concurrently as the Chairman of the Committee.
The executive of the Bank of Korea consists of the Governor, the Senior Deputy Governor, and five or fewer Deputy Governors.

The governor, appointed by the President on the deliberation of the State Council, represents the Bank. The term of office of the Governor is four years and the governor may be reappointed once. The Governor conducts policies formulated by the Monetary Policy Committee as the chief executive officer of the bank, keeps the Committee informed about current matters requiring its attention and provides the bank with materials and advice necessary for the resolution of its policies. In addition, the Governor may attend and opine on matters related to money and credit at the State Council.

The Senior Deputy Governor assists the Governor and is appointed by the President upon the recommendation of the Governor. The Deputy Governors are appointed by the Governor and undertake their respective duties in the manner stipulated in the Articles of Incorporation of the Bank of Korea. The term of office of the Senior Deputy Governor and each of the Deputy Governors is three years and they may be reappointed only once.

As for its executive body in detail, The Bank has 15 departments in its head office in Seoul, and 16 branches in major cities. In addition, it has five overseas representative offices in major international financial centers, such as New York, Frankfurt, Tokyo, London, Beijing.

The Auditor, appointed by the President on the recommendation of the Minist…

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The Bank of Korea has the exclusive right to issue banknotes and coins in the Republic of Korea. Their dimensions, designs and denominations are determined by the Monetary Policy Committee with Government approval. The banknotes and coins thus issued have the status of legal tender within the country for all transactions, both public and private, without limitation.

Currently, there are four different denominations of banknotes in circulation: ₩1,000, ₩5,000, ₩10,000 and ₩50,000 and four denominationf of coins: ₩10, ₩50, ₩100 and ₩500.
The most important mission of the Bank of Korea is formulating and implementing monetary and credit policy. This is a process of controlling the supply or cost of money in order that the economy may grow in a sound manner on the basis of price stability. To this end, the Bank conducts monetary and credit policy with an emphasis on price stability while taking into consideration such matters as economic growth and financial market stability.

In order to achieve the ultimate goal of maintaining price stability, the Monetary Policy Committee of the Bank sets the Base Rate every month after overall consideration of price movements, economic activity and financial market conditions. Then the Bank steers the call rate to converge on the newly-set level of the Base Rate using its policy instruments. The change in the call rate affects market interest rates such as yields on CDs and Treasury bonds, and banks' deposit and loan interest rates. These changes in interest rates tend to influence consumption and investments and, as a result, inflation.

The Bank's monetary policy is conducted mainly through open market operations, apart from which the Bank uses lending and deposit facilities and reserve requirements policy.
The Bank of Korea makes loans to and receives deposits from banks, thus serving as the banker to the banking sector.

The Bank conducts credit operations with banks by rediscounting commercial bills or by extending loans against eligible collateral with maturities of up to one year.

As the lender of last resort, the Bank may extend exceptional loans to banking institutions in periods of serious emergency.

As the fiscal agent of the government of the Republic of Korea, the Bank of Korea carries out various kinds of businesses for the government in accordance with the Bank of Korea Act and other relevant laws.
The Bank of Korea has onus for the operation and management of the nation's payment systems.

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