choongsoo kim : new role of central bank and regional financial cooperation after the global crisis opening address by mr choongsoo kim, governor of the bank of korea, the 47th seacen governors ’ conference, high - level seminar and the 31st meeting of the seacen board of governors, seoul, 13 february 2012. * * * distinguished governors, ladies and gentlemen, i would like to express my gratitude to all my fellow central bank governors for taking part in the 47th seacen governors ’ conference, high - level seminar and the 31st meeting of the seacen board of governors. my special thanks go to 5 distinguished speakers, mr. pier carlo padoan, deputy secretary - general of oecd, mr. stephen p. groff, vice - president of the adb, professor charles engel from university of wisconsin, mr. hannoun from bis and mr. chia from imf who have come from afar to deliver the keynote addresses. it is a great honor and pleasure for us to be hosting the seacen governors ’ conference in seoul again after 13 years. though i stand before you today as the representative of the bank of korea, i bid you welcome on behalf of all the korean people. in the wake of the global financial crisis, emerging market countries recovered faster than the advanced countries. however, the increasing uncertainties surrounding the world economy since then still pose a threat to the asian economies. at this juncture, we should learn the lessons of the global financial crisis. this means setting the financial infrastructure right and establishing an effective policy response system in order to ward off further crises by speeding up global economic recovery. i think now is the time to change the policy stance and also strategies. global financial resources may have in recent years been directed toward financing of unsustainable financial deficits and debt - ridden countries, and little toward growth and job creation. i believe that redirecting of financial resources more toward growth, and more specifically toward countries with high productivity could yield substantial benefits to all in the long run. this is why i see a greater role for asia going forward. asia overcame the global financial crisis well, and has remained resilient to negative spillover from ongoing crisis in europe. moreover, many expect asia to develop even more into an engine of global economic growth. if we look at the outbreak and spread of the global financial crisis and the policies adopted in response, we can draw many precepts and pointers as to the role

still suffered shocks very similar to those at the time of the asian financial crisis of 1997 – 98. basically, the factor behind this was their vulnerability to external shock due to their export - driven growth strategies, rapid economic liberalization and market opening. as several researches by the fed of the us and the asian development bank ( adb ) have pointed out, the financial crisis in advanced countries was transmitted to asian economies through the trade channel even more than through the financial channel. 3 in the initial phase angus maddison, chinese economic performance in the long run, second edition, revised and updated 960 – 2030 ad, the development centre, oecd 2007. “ asia accounted for over half of world output for 18 of the past 20 centuries. ” the economist, february 27, 2010, p. 72. for example, the welcome address by ben bernanke on “ asia and the global financial crisis ” at the asia economic policy conference on october 2009 and the adb ’ s asian development outlook update on september 2009. of the crisis, the foreign exchange and financial markets in every country in asia suffered severe turmoil. however, they began to regain stability comparatively quickly. although this recovery was in part ascribable to the bold and active policy response of countries around the world, and to their close international policy cooperation, as seen for example in the use of bilateral currency swaps, it is also a fact that the asian financial sector was in comparatively strong shape thanks to its structural adjustments following the asian financial crisis, and this is considered to have played a considerable part as well. on the other hand, every country in asia also suffered very large real sector shocks by way of the trade channel. from the beginning of the fourth quarter of 2008, most asian countries shifted into states in which economic activity was extremely subdued, in line with the sharp drops in their exports as import demand in advanced countries shrank sharply due to the rapid slowdown of economic activity. subsequently, however, asian economies staged much faster recoveries than advanced countries and came to serve as the locomotives of the world economic recovery. during 2009, economic growth in major advanced countries, namely g7 countries, averaged a negative 3. 4 %, whereas that of the asian economies reached a positive 3. 6 %. in this year of 2010, growth rates in asia are expected to climb to 7. 5 %, and the forecast is that they will account for 40 % of world economic growth this year. 4 strengths and weaknesses of