some cases defying the taboo of buying government debt in the primary market. such effective uses, however, might have been attributed to a common global shock. abundant global liquidity and the fact that advanced economies themselves were breaking taboos on a much larger scale might have helped emerging economies avoid being penalized by international capital markets for ultra - loose expansionary policies. it is therefore questionable whether the same results would be obtained if emerging markets alone were to face the risk of falling into secular stagnation and if they were to implement similar expansionary fiscal and monetary policies in response. constraints on ucmps in emes a more difficult question is whether emerging economies should use unconventional policies when facing secular stagnation, when global liquidity is not sufficient. the chance of returning to very low inflation and low growth is significant for korea and other asian emerging economies, such as thailand and china, considering their rapid aging and earlier experiences of low inflation. even so, unconventional forward guidance may not be a desirable toolkit for emerging markets with greater uncertainty, exacerbating the inflexibility of unconventional forward guidance to sudden economic changes and the exit problem. in addition, there are several structural factors to consider. for unconventional forward guidance to be successful, the central bank must be able to commit to the announced strategy and make a credible case that it is consistent with achieving the central bank ’ s objectives. otherwise, the central bank could be subject to aggressive speculative attacks. for example, unconventional policies trying to lower interest rates could lead to excessive depreciation of the local currency if the market perceives the policy as being inconsistent with the macroeconomic fundamentals of the country. concerns about fiscal dominance is another example. the experience of japan since the 1990s well - illustrates that the main driver of public debt explosion has been agingrelated spending, not fiscal spending to boost the economy as is commonly believed. this shows that it is not easy for emerging economies that are experiencing rapid aging, to credibly convince markets of a scenario that temporarily requires a large fiscal stimulus while promising to maintain fiscal sustainability in the long - term. an alternative conventional forward guidance so, if unconventional forward guidance is not desirable, then what are the alternatives? one option could be scenarios - based conventional forward guidance. for example, in summer last year, this framework could have been used to present different scenarios for the two clear narratives regarding inflation : persistent vs transitory. the first scenario would have assumed inflation was more persistent, requiring faster policy normalization

of little change to the near - term outlook for inflation and some improvements in investor confidence following the approval of the four - year eff by the imf ’ s executive board. during the quarter, the bank offered nine variable rate cds and two usdollar indexed notes to the market. these instruments shifted $ 21. 8 billion into longer - tenor securities ( that is, between six and 18 months ) and offset the bank ’ s purchase from the market of us $ 196. 3 million, equal to about $ 19. 3 billion. against the background of these developments, the weighted average selling rate of the us dollar depreciated by 2. 5 per cent for the review quarter. this adjustment followed a depreciation of 6. 0 per cent in the march 2013 quarter. the slower pace of depreciation in the june quarter also reflected the impact of lower demand for foreign currency to meet current account transactions. bis central bankers ’ speeches inflation it is encouraging to be able to report that headline inflation was 1. 2 per cent for the june 2013 quarter, below the outturn of 2. 7 per cent for the march 2013 quarter and well below the forecast range for the june quarter of 2. 0 to 3. 0 per cent that we announced when we last met in may. the inflation outturn for the review quarter was largely due to the lagged passthrough of the depreciation in the exchange rate and the impact of drought conditions on the prices of some agriculture items. however, the impact of these factors was lower than the bank had anticipated. the lower than projected inflation also reflected the impact of a sharp reduction in energy costs, which was not expected, and the effect of weaker than anticipated demand conditions. for the september quarter, the bank is projecting inflation to be in the range of 2. 0 per cent to 3. 0 per cent. the materialization of this forecast would be below the inflation outturn for the september quarters of the last five years. inflation in this quarter is expected to be driven by increases in the prices of domestic agricultural produce and processed foods. in addition, inflation in the period is expected to reflect the impact of higher prices for crude oil and the effect of the seasonal increase in demand related to the summer holidays and back - to - school preparations. however, the announced reduction in communication costs and persistent weak demand conditions are expected to moderate the impact of these factors on the overall price level. headline inflation for july, at 0. 5 per