the second half we will meanwhile also have to set our new inflation target, which will be applied from next year. taking into full account the possibility of structural changes in the inflation environment since the global financial crisis, we will need to strive to find the optimal solutions for the target level, the period of application, and the target indicators. we will also need to pay particular attention to financial stability. in view of the various latent external risk factors, such as the possibilities of huge surges in international capital movements and of financial turbulence in vulnerable emerging market economies triggered by the us fed ’ s hiking of interest rates, and the uncertainties related to the greek economy, we must keep a close watch on international financial market conditions, and if any destabilizing factors are detected put into place measures to tackle them before it becomes too late. we need to heighten our caution concerning the rapidly growing household debt. the general consensus is that the probability of household debt threatening our economy ’ s stability is not high for now, but if its current rapid growth persists it could work to constrain household consumption and destabilize the financial system. we should therefore respond actively to the household debt problem, in closely cooperation with the government and the supervisory authorities. efforts to support structural reform are also crucial. structural reform should in principle be led by the government, but there will be some tasks that the bank of korea should carry out. we should bear in mind that it is essential above all to maintain our monetary policy stance at an appropriate level, in order to ensure not only macroeconomic stability but also the smooth implementation of structural reform. this is because, if the degree of monetary policy accommodatingness is inadequate, economic recovery will be delayed and make it difficult for the economy to withstand the shocks from structural reform. if on the other hand easing is excessive, then this could weaken economic agents ’ incentives for reform. there could be a need to strengthen our research studies related to structural reform and put forward feasible policy alternatives. as we have witnessed in the process of public sector reform, even if the policy directions for structural reforms have been properly established, their implementation remains difficult unless they are supported by social consensus. in this context, the bank of korea ’ s research findings related to structural reform should contribute to the understanding and participation of economic agents in structural reform. dear fellow members of the bank of korea, bis central bankers ’ speeches in situations characterized by a high degree of uncertainty like that of today

, to mop up a crisis without paying due consideration to the massive social costs that it causes. it follows that central banks should pursue both price stability and financial stability in a balanced and harmonized way to promote macroeconomic soundness. the central bank must make full use of its expertise in evaluating macro financial risks as well. and when necessary, it should work to counter these risks jointly with the government and the financial supervisory authorities. as a next step, from a global perspective, we need to work to enhance policy effectiveness through collective policy actions involving governments and central banks around the world. the world economy has become highly integrated, and the complexity and inter - connectivity of economic and financial phenomena have greatly increased. it has therefore become tremendously difficult for any one central bank alone to either prevent a crisis or deal with its aftermath. in this light, the recent crisis has triggered a realization among policy - makers worldwide of just how important policy cooperation is between the government, the central bank and the financial supervisory authorities. and the building - up of networks to support this cooperation is of course equally important. as i am sure you are aware, the construction of global financial safety nets was adopted as an agenda for the seoul g20 summit as a korean initiative. this may be seen as one prominent example of a collective policy action, having the characteristic of the supply of global public goods. lastly, i would point out the need for identifying exactly what influence monetary policy will have in the transformed economic and financial environment following the crisis. this crisis has had a devastating impact on the balance sheets of households, corporations and financial institutions, not to mention the government ’ s fiscal position. the experience of the crisis and the tightening of global financial regulations will also cause vast shifts in economic agents ’ behavior. furthermore, the changes in global macroeconomic conditions after the us federal reserve ’ s recent additional quantitative easing are looming as new challenges for central banks ’ monetary policy. in order to cope with this new world economic regime, we will need to devise necessary countermeasures to deal with the possible changes in the monetary policy transmission channels and the limitation on policy effectiveness. particularly, given that changes are always and everywhere accompanied by uncertainty, we should endeavor even more strongly to heighten the predictability and credibility of our monetary policy. closing remarks fellow central bankers, i hope this seminar provides an opportunity for constructive discussions on how the central bank contributes to economic and financial stability within the macroprudential policy framework. it will also be good