choongsoo kim : strengthening central bank cooperation closing dinner speech by dr choongsoo kim, governor of the bank of korea, at the bis bimonthly meetings, sydney, 24 february 2014. * * * thank you, christian, for a very kind introduction. i still vividly remember your office the first time we met in paris. i appreciated very much that you met me despite your busy schedule. i also envied you, as we koreans must take a more than 10 hour - flight to see and visit the chateau, but you french central bank people enjoy your lives working at the gorgeous chateau. governor glenn stevens of the reserve bank of australia, ladies and gentlemen joining us here today... it is a great honor and pleasure for me to stand before you all, in sydney, one of the most beautiful and great port cities in the world. first of all, i wish to express my sincere appreciation to governor stevens, for hosting this event with the warmest hospitality. my thanks also go to general manager caruana, who has given bank of korea staff many opportunities to gain valuable experience working with the bis. looking back, i find that my four years of service as governor have been influenced the most by activities of the bis. this has been very instrumental to me in learning what central banking is all about. i am sure that my life as governor would have been much less fruitful and rewarding had there been no bis. and taking this opportunity, i would like to talk about three things in this regard today. first, let me begin by telling you why i have loved coming to basel. the reason why i have especially enjoyed the bis meetings is that this is a peer group meeting, in which governors can network with each other through intimate and frank discussions. i have gathered much information necessary to my work as a central bank governor through attending these meetings over the past four years. this has been an indescribably valuable experience to me, someone not originally from the central bank community. the bis is acknowledged as a world - class institution and knowledge base, which leads the way in dealing with the main issues of the global economy. i have learned a great deal not only from participating in the bis - led discussions, but also from reading the excellent background notes prepared by the secretariat. and these are the two things that i will miss most in the future. one notable trend seen in the recent recovery from the global crisis is that central banks are now

, to mop up a crisis without paying due consideration to the massive social costs that it causes. it follows that central banks should pursue both price stability and financial stability in a balanced and harmonized way to promote macroeconomic soundness. the central bank must make full use of its expertise in evaluating macro financial risks as well. and when necessary, it should work to counter these risks jointly with the government and the financial supervisory authorities. as a next step, from a global perspective, we need to work to enhance policy effectiveness through collective policy actions involving governments and central banks around the world. the world economy has become highly integrated, and the complexity and inter - connectivity of economic and financial phenomena have greatly increased. it has therefore become tremendously difficult for any one central bank alone to either prevent a crisis or deal with its aftermath. in this light, the recent crisis has triggered a realization among policy - makers worldwide of just how important policy cooperation is between the government, the central bank and the financial supervisory authorities. and the building - up of networks to support this cooperation is of course equally important. as i am sure you are aware, the construction of global financial safety nets was adopted as an agenda for the seoul g20 summit as a korean initiative. this may be seen as one prominent example of a collective policy action, having the characteristic of the supply of global public goods. lastly, i would point out the need for identifying exactly what influence monetary policy will have in the transformed economic and financial environment following the crisis. this crisis has had a devastating impact on the balance sheets of households, corporations and financial institutions, not to mention the government ’ s fiscal position. the experience of the crisis and the tightening of global financial regulations will also cause vast shifts in economic agents ’ behavior. furthermore, the changes in global macroeconomic conditions after the us federal reserve ’ s recent additional quantitative easing are looming as new challenges for central banks ’ monetary policy. in order to cope with this new world economic regime, we will need to devise necessary countermeasures to deal with the possible changes in the monetary policy transmission channels and the limitation on policy effectiveness. particularly, given that changes are always and everywhere accompanied by uncertainty, we should endeavor even more strongly to heighten the predictability and credibility of our monetary policy. closing remarks fellow central bankers, i hope this seminar provides an opportunity for constructive discussions on how the central bank contributes to economic and financial stability within the macroprudential policy framework. it will also be good