the advance of the fourth industrial revolution, new growth engines can no longer be created through larger inputs alone. we need to devote all our energies to 2 / 8 strengthening productivity across the economy and fostering new industries. we must provide unwavering support to create an environment in which the private sector can unleash its creative and innovative potentials, thereby expanding investment, creating quality jobs and heightening efficiency. shifting to an innovation - based economy will entail numerous challenges. however, delaying this process to avoid headwinds will distance us from greater growth potential. dear members of the bank of korea! let me talk now about the main tasks that the bank of korea will need to focus on this year. we will have to conduct our monetary policy so as to support economic recovery and to ensure that inflation stabilizes at the target level over a medium - term horizon. since it is forecast that our economy will grow at a pace below the potential level, and that demand - side inflationary pressures will not be high, we will need to maintain our accommodative monetary policy stance. in this process, we will determine whether to adjust the degree of monetary accommodation, based on an assessment of wide - ranging factors such as external risk developments, domestic macroeconomic trends, and any changes in financial stability conditions. 3 / 8 i would like to once again highlight the critical importance of accurate diagnosis and forecasting of economic developments for the timely and effective operation of monetary policy. we will need to improve the precision of our forecasting by expanding the scope of financial and economic indicators and utilizing information technology. the remarkable development of digital technology offers us tools to use the vast amount of real - time information related to economic activity. we need to equip ourselves with the abilities to analyze and forecast precisely based on ai and big data. in terms of economic analysis and forecasting, we must consider the possibilities that the behaviors of economic agents and the relationships among major economic variables may have changed significantly from the past. we will also need to pay closer attention to policy communications. in this persistently low - interest and low - inflation environment, we may face an increased possibility of conflict between the two goals of price stability and financial stability. therefore, a clear rationale behind the bank ’ s decision - making should be presented so that economic agents can easily understand its policy decisions. since inflation is hovering below our target objective, we need to thoroughly analyze and review price conditions and explain them to the public in detail.

reserve bank of india ( 2012 ), rbi annual report – 2011 – 12, mumbai. bis central bankers ’ speeches per employee and business per branch. however, net interest margin ( nim ) has gone up indicating deterioration in allocative efficiency ( table 2 ). let me now turn to financial inclusion with a particular reference to the eastern - region. financial inclusion in order to sustain a higher economic growth, it is important to bring the excluded segment of the society into the fold of the formal financial sector. in recognition of this, the reserve bank has taken a number of steps to take formal banking to door steps of habitations with population over 2000 through the business correspondent ( bc ) model where the bcs provide basic banking functions acting as agents of banks. simultaneously, a number of initiatives such as incentivisation of branch authorisation scheme for banks to open branches in unbanked centres, simplification of know your customer ( kyc ) norms, technological interventions and financial literacy - oriented programmes to increase awareness have been taken. while the initial impact of these initiatives has been positive, it has created a huge potential for expansion in banking business once the level of activity is scaled up and government social benefit transfers increasingly take place through the banking sector. while we have our own data source to gauge financial inclusion, the census of india provides useful information on access to banking. it shows that about 59 per cent of households had access to banking services in 2011 as compared with only 35 per cent in 2001. increase in access for the eastern - region has also gone up significantly from about 29 per cent in 2001 to 47 per cent in 2011, though the region still lags behind the all - india average ( table 3 ). in 2001, the all - india average population per bank branch was 15, 600, which has fallen steadily to 12, 500 by 2012 again suggesting an increased penetration of the branch network. for the eastern - region population per branch has declined from 19, 500 in 2001 to 17, 300 in 2012. while the eastern region has witnessed an increase in banking outreach since 2001, its average has remained lower than the all - india average underlining considerable scope for expansion. conclusion let me conclude with some thoughts on the challenges ahead. first, weakening asset quality is an immediate concern for the banking sector. this is more so as the banks ’ credit composition in the recent years has changed towards longer term assets such as infrastructure and housing. while improvement in macroeconomic policy environment and expected revival in