the auspices of the financial stability board. third, macroprudential policies that are targeted to banks may create an incentive for financial intermediation to migrate outside of the regulated banking system. the vulnerabilities may still emerge, albeit elsewhere in the financial system — perhaps in institutions or structures that are less stable and resilient than our banks. in part reflecting these incentives, we regularly monitor financial intermediation both inside and outside of the banking system. summary to sum up, while there is evidence that financial vulnerabilities have the potential to translate into macroeconomic risks, a general consensus has emerged that monetary policy should be guided primarily by the outlook for unemployment and inflation and not by the state of financial vulnerabilities. financial system resilience, supported by strong through - the - cycle regulatory and supervisory policies, remains a key defense against financial system and macroeconomic shocks. there is a clear need for new theory and empirics to address the questions about monetary policy and financial stability i have posed today. i encourage you to continue to contribute to these answers. by engaging the help of the wider academic community, conferences such as this one provide an invaluable opportunity to make progress on issues of great importance for economic policy. references adrian, tobias, nina boyarchenko, and domenico giannone ( 2019 ). “ vulnerable growth, ” 3 / 4 bis central bankers'speeches american economic review, vol. 109 ( april ), pp. 1263 – 89. adrian, tobias, and nellie liang ( 2018 ). “ monetary policy, financial conditions, and financial stability, ” international journal of central banking, vol. 14 ( january ), pp. 73 – 131. ajello, andrea, thomas laubach, david lopez - salido, and taisuke nakata ( 2019 ). “ financial stability and optimal interest rate policy, ” international journal of central banking, vol. 15 ( march ), pp. 279 – 326. bernanke, ben s., and mark gertler ( 1995 ). “ inside the black box : the credit channel of monetary policy transmission, ” journal of economic perspectives, vol. 9 ( fall ), pp. 27 – 48. boivin, jean, michael t. kiley, and frederic s. mishkin ( 2010 ). “ how has the monetary transmission mechanism evolved over time? ” in benjamin m. friedman and michael woodford, eds., handbook of monetary economics

conditions are reflected in wage and price decisions has fallen compared to the past, in consequence of intensified corporate competition, structural changes in the labor market and the anchoring of price stability. other research has concentrated on structural factors that are said to be pulling inflation down. studies focused on the decline in inflation expectations claim that, as the level of expected prices has fallen during the long period of low inflation, real inflation has slowed as a result. besides 1 / 2 bis central bankers'speeches this, views have also been raised stating that supply - side shocks, including innovations in distribution and technological advancements, have led to a continued structural weakening of inflation pressures. however, there are also many who find it hard to see the recent weakening relationship between economic conditions and prices as a structurally fixed development. two representative grounds for this argument are the non - linearity of the phillips curve, implying that under conditions of economic slack the influence of economic conditions on prices could temporarily decline, and the time lag between economic activities and their effects on prices. ultimately, regarding the question of whether the inflation dynamics have changed, and the causes for this if they have, we need to monitor any increase in demand - side pressures and the resulting price movements as the economic recovery strengthens going forward. in - depth followup studies will also need to be conducted continuously, at the same time. implications of changing inflation dynamics for monetary policy an accurate understanding of the relationship between economic activities and inflation is critical for effective monetary policy implementation and communication with the general public. as inflation remains low even despite their economic recoveries, the us and other major advanced countries have faced difficulties in deciding when and at what pace they will reduce their degrees of monetary policy easing. this also shows the need for continuing more in - depth analysis of the relationship between economic activities and inflation. in particular, central banks that are operating inflation targeting regimes may fall into dilemmas as they try to decide on policy options, while dealing with their tasks both of anchoring inflation at the target level, and of achieving macroeconomic and financial stability. concluding remarks ladies and gentlemen, i believe that the results of the research to be presented and discussed here today will be very useful to the bank of korea also. the studies on pricing behavior and case analyses of major countries will help us to better understand the inflation dynamics. and the research undertaken to discover effective monetary policy measures will help us in conducting our future monetary policy. i hope that you will find today ’ s conference useful and informative