from qe. moreover, in february we did make an unexpected announcement of a change in the maturity structure of our purchases. this was intended to prevent the bank ’ s holdings becoming unduly concentrated in any particular segment of the market and had the for a summary of the evidence, including references to related studies, see michael joyce, matthew tong and robert woods ( 2011 ), “ the united kingdom ’ s quantitative easing policy : design, operation and impact ” bank of england quarterly bulletin, 51 ( 3 ), 200 – 212. specifically, investment - grade yields fell by around 70 basis points, while sub - investment grade yields fell by around 150 basis points. bis central bankers ’ speeches consequence of shifting them more towards shorter durations. the subsequent response of yields at different maturities was broadly in line with what would have been expected on the basis of our first round of purchases ( see chart 3 ). the approach is also less suited to analysing the impact on the prices of assets which are less immediate substitutes, such as equities. these are likely to take longer to adjust, as it probably takes a while for portfolio managers to decide how they want to rebalance their portfolios. but, as chart 2 shows, equity prices rose substantially once qe was actually under way – by around 50 % during qe1 and around 10 % during qe2. in both cases, the switch from decline to growth coincides with the commencement of asset purchases. it seems unlikely that all of the recovery in equity prices during these periods was down to our qe. during both phases of the programme, the us federal reserve undertook similar policies, and in recent months the ecb has injected large amounts of liquidity through its two longer - term refinancing operations. equity prices rose in those jurisdictions too. many of the companies in the equity price indices are international in focus and will be as exposed to developments abroad as in their home market. moreover, there will have been other factors affecting equity prices, though during the second programme those other factors – slowing growth and the worsening euro - area situation – seem more likely to have depressed equity prices, rather than boosted them. given that qe is supposed to operate by driving asset prices up, however, it would seem peculiar not to ascribe some part of the rise to our actions. econometric studies4 carried out at the bank imply that equity prices probably rose by about 20 % as a result of the first phase

choongsoo kim : coping with volatile capital flows – korea ’ s experience and the challenges ahead speech by mr choongsoo kim, governor of the bank of korea, at the european union chamber of commerce in korea ( eucck ) annual seminar, seoul, 27 october 2010. * * * greetings it is a great pleasure for me to be here with you today at this “ annual seminar of the eucck ( european union chamber of commerce in korea ) ”. this is all the more so as your organization contributes so greatly to the growth of bilateral business activities between the eu and korea. korea and europe will get much closer to each other as the korea - eu fta takes effect from july of next year. with experiences of living in europe for nearly four years on two different occasions, i ’ d love to enjoy high - quality european wine at a cheaper price thanks to the korea - eu fta. let me take this opportunity to express my very deep thanks to all seminar participants, and especially to president jean - marie hurtiger, for this invitation to address you. today, i wish to share with you korea ’ s experiences with volatile capital flows and our related policy responses over the last decade. i will then mention some of the policy challenges that lie ahead of us. as all of you are aware, last weekend, we were able to come up with an agreement on currency issues as well as other critical global issues at the g20 finance ministers and central bank governors meeting at gyeongju. i find it a win - win result for all parties concerned. in particular, i ’ d like to remind you that the communique includes the following statement, “ these actions will help mitigate the risk of excessive volatility in capital flows facing some emerging countries ”. such a statement has a significant policy implication for a country like korea, whose day - to - day currency fluctuations are much higher than those of other g20 member economies. stylized facts on capital flows and the impossible trinity i ’ d like to begin my speech by presenting some stylized facts on capital flows and a few words about the impossible trinity. korea, like most other emerging market countries, has in recent years become rapidly integrated into international financial markets, through capital account liberalization and market opening. to give an idea of the scale of this movement of capital in the world economy, cross - border capital flows to emerging markets increased almost eight - fold between 1994 and 2007. 1 the case for