The logo of the Bank of Korea at its headquarters in Seoul.<\/p>\n
JUNG YEON-JE\/AFP via Getty Images<\/p>\n
Most central banks, including the Federal Reserve, still treat artificial intelligence as a research topic. The Bank of Korea treats it as an emergency.<\/p>\n
In January \u2014 before the AI boom began upending global markets \u2014 the BOK deployed the first machine-learning model<\/a> built for global central banking, a move that now looks prescient as AI reshapes Korea\u2019s economy faster than any traditional policy framework can track. An institution built to manage inflation cycles suddenly finds itself built for something else entirely: real-time adaptation.<\/p>\n The question is whether the BOK can keep pace with an unproven technological revolution transforming its $1.9 trillion economy in real time, in plain view.<\/p>\n If only Governor Shin Hyun Song could ask ChatGPT, Claude, or his team\u2019s internal BOKI (Bank of Korea Intelligence) model what comes next. But AI tools are just as limited as the economic elder statesmen we\u2019d normally turn to for perspective \u2014 and in 2026, there are no wise old men or women to consult, whether in Seoul, Washington, or Frankfurt.<\/p>\n Over the 17 months of the Trump 2.0 presidency, “unprecedented” has become badly overused. But what else do you call a moment when the leader of the world\u2019s largest economy is waging a tariff war against the globe, a shooting war rages in the Middle East, China’s innovation machine looks unstoppable, and a technology<\/a> with unproven profit potential is sending equity markets to nosebleed heights?<\/p>\n Set aside, for now, how AI might reshape corporate profits, productivity, staffing, wages, and the mechanics of high-frequency trading. Set aside, too, the epic correction awaiting asset markets<\/a> if investors conclude today\u2019s colossal data-center investments are a bubble headed for a 2008-style reckoning \u2014 or worse.<\/p>\n Korea sits on the front line of all these questions. Arguably no economy among the world\u2019s top 15 is being transformed faster by AI. It’s striking to remember that as 2026 began, AI still felt more like science fiction than economic fact to Korea’s 51 million people.<\/p>\n AI is fast becoming a central pillar of Taiwan\u2019s economy as well \u2014 perhaps the pillar, as semiconductor exports explode. In May, chip shipments drove a 51.7% year-on-year surge in exports<\/a>, following a nearly 40% jump in April. In the first quarter, Taiwan’s economy grew at its fastest pace since 1987<\/a> \u2014 hitting 13.7%. Heaven knows what AI-fueled GDP number the April-June quarter might produce.<\/p>\n Korean exports surged 70.9%<\/a> year-on-year in June, the biggest jump since 1978. That followed a 53.4% jump in May. How could increases of this magnitude possibly be sustainable? And if they are, how should Governor Shin react?<\/p>\n In times past, the central bank might hike rates to tame the exuberance. But in 2026, it\u2019s entirely unclear how a blunt, “old economy” instrument like the benchmark rate would even affect a tech-driven gold rush fueled mostly by overseas demand. Hike rates too aggressively, and the BOK risks being blamed for wrecking Korea’s shot at true global leadership. Stand back, and it risks letting irrational exuberance run amok.<\/p>\n Here, BOKI probably isn\u2019t much help yet. In the meantime, AI is rapidly exacerbating two of Korea’s biggest economic challenges in 2026: the extreme dominance of a handful of corporate giants<\/a>, and surging housing prices.<\/p>\n For 29 years since the Asian financial crisis, a succession of Korean presidents pledged to wrest control away from a small cluster of family-owned conglomerates, or chaebols. Yet the AI boom is largely enriching those same companies \u2014 Samsung Electronics and SK Hynix chief among them \u2014 meaning their power is rising in lockstep with their stock prices.<\/p>\n At the same time, the bonuses Korea\u2019s AI tigers are being pressured to pay employees are pouring new fuel on one of Asia’s most overheated real estate markets. Household debt ended 2025 at an all-time record high<\/a>, with an average loan balance per borrower of $66,000.<\/p>\n The ranks of young consumers priced out of the Seoul housing market are surely swelling in dangerous ways. The same divide is opening up more broadly. Those who held hefty Kospi portfolios before January 1 are doing very well. Even though the index is down considerably from its all-time high<\/a> above 9,000 set in June, it\u2019s still up 73%<\/a> year to date.<\/p>\n Amid all this, it\u2019s heartening to see the BOK adapting to how AI is reshaping the mechanics of Korea’s economy. Whatever one thinks of Korea’s recent presidents, the country has been fortunate in its central bank leadership.<\/p>\n It\u2019s still early days for Shin, who took the reins on April 21. But his predecessor, Rhee Chang Yong, was as steady a monetary hand as Asia has known. From Covid to trade wars to a president declaring martial law<\/a> to the war in Iran, Rhee held Korea Inc. together from 2022 to 2026. To his credit, it was Rhee who greenlit the BOK\u2019s partnership with internet giant Naver to build the institution’s AI model.<\/p>\n