relationship lending can remain profitable in a more competitive environment. 3. increased competition in banking seems to be reducing the availability of relationship lending in the euro area before further describing the effects of increased competition on the availability of relationship lending, let me stress that the phenomena we are talking about are not directly observable, and hence making it hard to evaluate the availability of relationship lending with certainty. on the one hand, increased competition may deter banks from costly acquisition of information on borrowers if they fear that the latter can more easily switch to other banks in good times. on the other hand, the competition from non - banks in so many of banks'activities may push more banks towards relationship lending with sme, a segment on which they can not be challenged by non - banks. recent evidence seems to suggest that the availability of relationship lending is decreasing. we observe for instance that in belgium and germany, the growth rate of real loans to the private sector is lower than output growth, which is quite different from what was observed in previous episodes of economic slowdown. this decline coincides with large commercial banks reducing the scale of their retail banking because competition from local savings banks has intensified. there is also evidence that the banks which have been involved in mergers tend to limit the scale of their lending relationship activities. finally, some observers expect that the introduction of the basel ii accord would increase the capital charges on loans supplied to small and medium enterprises. this new regulation is likely to make the price of credit to small and medium enterprises more responsive to market interest rates. this would directly affect the role of banks in the monetary policy transmission ; as the recent research in the eurosystem has shown this role depends on the particular environment in which european banks have operated up to the recent past. in conclusion, recent trends in the european financial markets seem to have put pressure on banks, leading some of them to reduce the scale of their relationship lending activities. if it continues, the recent reduction in the availability of relationship lending in europe could affect the euro area business cycle and the transmission of monetary policy as the liquidity insurance provided by banks to sme decreases. all in all increased competition will trigger substantial changes and cause difficulties. but in the end after a period of transition the financial industry of the euro area will have gained competitiveness and strengthened robustness. such developments are clearly of primary importance for central bankers and this is precisely why this conference is so useful.

- age poverty, education issues, income and asset inequality, and dualism in the labor market, we should not limit our research scope to solely monetary policy. let's say we successfully win the fight against inflation. even so, high levels of prices will still remain as a burden on the cost of living, and this cannot be managed solely through monetary policy. in order to reduce korea's high costs for essentials compared to major economies, we need to ponder more foundational solutions, such as diversifying supply channels and reforming the distribution system ( im et al., 2024 ). the low birth rate & an aging population, through the spiral of regional imbalances & overconcentration in the capital, have been hampering korea's growth potential for a long time ( chung et al., 2023 ; hwang et al., 2023 ). we urgently need to find a way to break this vicious cycle. the high level of household debt also needs to be controlled so it doesn't hinder financial stabilization. recently, the debt ratio decreased due to the upward revision of nominal gdp after the national account base year was changed. it remains unchanged, however, that the household debt issue is still a threat to the korean economy, so we must continue working hard to stabilize it downward ( lee & kang, 2023 ). we cannot expect sustainable growth without addressing these structural problems, as we will face a huge social shift in the light of climate change and ai innovations. this explains why the bank of korea needs to become a top - tier think tank in korea by advocating for structural reform and working closely with the government and related institutions, not only just conducting monetary policy. various interest groups may create some noise as change is brought to a deep - rooted structure. indeed, some might be skeptical of or criticize the bank of korea, which has no legal authority to do so, for dealing with sensitive social issues. however, because the bank of korea is free from those interests and has no legal authority, it can analyze the current status from a more neutral perspective and propose solutions from the longterm view. with a responsibility to provide a blueprint for economic growth, we must continue playing our role in offering alternatives for structural reform. however, even our policy proposals will be nothing but empty echoes if they are not backed by expertise. for our policy messages to resonate and gain consensus, the quality of our research should gain trust from the outside the