this worsening income inequality. notably, in the era of the fourth industrial revolution, now in progress, there are concerns that the number of unskilled jobs could decline rapidly. however, we cannot go against the flow of globalization and technological innovation. and in this regard, international organizations such as imf and world bank recommend that we should pursue “ inclusive ” growth, which ensures that many people can share the benefits of growth. more specifically, creating more jobs, increasing household incomes and expanding the social safety net are recognized as relevant policies for promoting inclusive growth. we can talk more about this topic during session two today, on “ inclusive growth and employment. ” another challenge that we must tackle is population aging, which is progressing rapidly now in many countries. population aging is likely to undermine economic growth as it reduces the labor supply and saps aggregate demand at the same time. for korea, in particular, as the pace of our population aging is rapid, but our preparations for it insufficient, the negative effects of population aging on growth seem likely to be substantial. in response to this, proper policy measures need 1 / 2 bis central bankers'speeches to be put in place, to ease the rapid drop in elderly consumption while we at the same time strengthen social support related to child birth and child care. the theme of our first session today was chosen to be “ population aging ”, which i think may suggest just how important and urgent this issue is. finally, we need to also address the issue of financial imbalances. since the global financial crisis, international efforts to ensure financial stability have strengthened, as seen in the introduction of global regulatory frameworks such as the basel iii accord and the otc derivatives market reforms. however, the financial imbalances in major emes have accumulated further, driven by greater household and corporate debt leverage in these economies. financial institutions have been seeking high - risk, high - return investments, in response to their worsening profitability due to the low interest rate environment. in korea, household debt is already at a historic high, and has been growing faster than incomes, so that it poses a major risk to financial stability. i hope that we will obtain valuable insights related to this tomorrow, in the special session led by the federal reserve bank of new york, on ways of securing financial stability and the role of monetary policy. so far, i have raised three policy issues — income inequality, population aging and financial imbalances. besides these, of course, there

guidance as an unconventional policy tool, to be deployed only in extraordinary times. some central banks routinely offer financial markets forward guidance about interest rates that is less specific. the bank of canada has done so at times in the past. back in 2005, for example, our interest rate announcements mentioned the need to lower the policy rate “ in the near term ” and “ over the next four to six quarters. ” the most complete form of this routine forward guidance is to publish a projection for the future path of policy rates. this is the practice of sweden ’ s central bank, for example. similarly, the us federal reserve publishes so - called “ dot plots ” to indicate how its federal open market committee views the likely future path of interest rates. offering routine forward guidance obviously makes it easier for financial market participants to predict the actions of the central bank. arguably, this makes markets more efficient by reducing uncertainty about future policy. however, this comes at a cost : by anchoring financial market expectations, forward guidance reduces the reaction of markets to economic news. in short, it suppresses the signalling role of financial markets. as canada recovered from the global financial crisis, the bank gradually moved away from the most definitive form of forward guidance to a softer form. by 2013, though, we were becoming increasingly uncomfortable with offering even soft forward guidance to markets. the economy was struggling to return to full capacity, and we could not fully explain why exports and business investment were weaker than our economic models were projecting. we wanted markets to appreciate the uncertainty we were facing, and were concerned that providing forward guidance was giving participants a false sense of certainty. therefore, during the second half of 2013 we gradually toned down the forward guidance that we were providing in our interest rate announcements. this had the effect of shifting the bank ’ s uncertainty back out into the marketplace, which caused some market volatility. by 2014, we had stopped providing routine forward guidance altogether. not everyone was happy about this. but 4 / 6 bis central bankers'speeches we have seen signs that financial markets have become more responsive to data surprises as a result, particularly over the past year. in other words, market signalling has become stronger. since 2014, we have begun drafting each interest rate announcement on a blank page. this is to avoid getting locked into repeating specific language that, when changed, can create big market disruptions. we choose the words that best communicate our expectations for the economy and monetary policy. our latest interest rate announcement at the end of