finances. sound public financial governance is the legitimate use of authority in the management of a country ’ s financial resources with integrity to promote sustainable development. at the heart of it all, sound governance practices in the government can be traced back to the concept articulated by french enlightenment political philosopher ( baron de ) montesquieu in the 18th century. the separation of power between the legislative, executive and judicial arms of the government safeguards against authority being excessively centralised in any particular party. it is the effective separation of power that provides the checks and balances that ensure that there is strong financial governance at all levels of government. it is the effective separation of power that ensures that the decision maker not only considers his or her self - interest but also that of the society at large. it is the effective separation of power that ensures that the risk of abuse or misuse of public funds is minimized. therefore, if you want to know the state of public financial governance in a country, the first question to ask is whether there is effective separation of power. to a great extent, the current state of public finances reflects the past track record of financial governance in the public sector. if the state of fiscal health in the crisis - affected economies had been in a better condition, monetary policy would not have had to do so much heavy lifting, qe may not have seen the light of day, and we may now be having better economic growth. when there is an imbalance in macroeconomic policies, or when such bis central bankers ’ speeches policies are used as substitutes for structural reforms, the long - term outcomes will always be sub - optimal, not least because of the distortions and imbalances that are created. it is certainly the case that the recent crisis has been a key factor behind the increase in government indebtedness. in the aftermath of the crisis, governments in the crisis affected economies had to use public funds to rescue troubled banks. for example, ireland had a government debt to gdp ratio of just 24 % in 2007, but due to its banking crisis and its impact on the irish economy, that number jumped to 111 % by 2011 3. in fact, even for countries that were not at the centre of the financial crisis, fiscal spending to stimulate domestic demand was increased to offset the negative real sector shock created by the crisis. the low growth environment also reduced the tax revenues of governments, further eroding public finances. so, the crisis certainly played a role in the worsening

bank's financial stability role drawing on our experience of this financial crisis, and discussions concerning framework reform proposals and actual instances in major countries. in addition, the bank should endeavor to ensure that the general stance of emerging market countries, including korea, is fully reflected in the course of reaching a global consensus on financial stability. to this end, we have to participate actively in discussions at g - 20 meetings as well as in the financial stability board ( fsb ) and the basel committee on banking supervision ( bcbs ), both of which our nation joined in march. we have to do our best to set the inflation target, to be adopted for the period from next year onward, at an appropriate level. although inflation targeting per se is assessed to have contributed considerably to price stability, both domestically and internationally, the bank must also review any shortcomings in the system based on its past experiences. the bank should make improvements in its operation, if necessary. among the key projects we are now pursuing, i would like to mention two in particular. the running of the new bok - wire +, which went into operation this may, should be stable and seamless. and every effort must be made to ensure the trouble - free supply and circulation of the 50, 000 - won banknotes, to be introduced from june 23. the various other businesses we handle should also be carried out without the slightest slipup. settlement risk needs to be managed still more thoroughgoingly to cope with the expanded participation of non - bank financial institutions in the payment and settlement system. we must take great pains to ensure that the systems introduced for improving the efficiency of liquidity management, such as fungible issuance and prior fixed rate tenders for monetary stabilization bonds, achieve their desired results. in the management of the foreign reserves, we should do our utmost to upgrade risk management further and come up with ways to achieve stable returns in this period of low interest rates worldwide. my dear colleagues, the direction of financial and economic change at home and abroad remains very uncertain. as a result, the central bank's accurate assessment of the situation and selecting of timely and effective policy options are more important than ever for the national economy. carrying out this mission, the bank should arrange its organizational and personnel management in such a way as to maximize its potential. full consideration also needs to be given to a new organization in charge of activities related to the international financial institutions that the country has recently joined to ensure that it plays its role