in this situation, we brought in foreign capital and built factories with it. we also imported raw materials and technology. low - waged domestic labor, our only resource, was recruited by these factories that manufactured light industries products. these were then exported and the foreign currency earned was reinvested in domestic industry. with the repetition of this cycle, a snowball effect started to operate and this accelerated as time went by. as a result, most of the problems of extreme poverty had been solved by the late 1970s. subsequently, economic development led by labor - intensive light industries began to reach its limits. we, therefore, started to build up heavy industries on a full scale, such as steel, petro - chemicals, automobiles, and shipbuilding. this policy obtained excellent results and korea was able to become a member of the oecd, the so - called rich countries ’ club in 1996. meanwhile, the growth environment had changed greatly. we had moved from a low - waged to a highwaged, from a government - driven to a market - centered environment, and from closed protectionism to openness and competition. the korean economy, however, failed to adapt promptly to these environmental changes and consequently suffered a foreign currency crisis in 1997. however, koreans were never wholly downhearted because of this crisis. in some way, it was an opportunity to solve the accumulated structural problems. taking the suffering in their strides, both government and people supported bold structural reforms covering all aspects of society including firms, financial facilities, public services, and labor market. in consequence, korea was able to overcome the foreign currency crisis earlier than expected and was held up as the model pupil of the imf ’ s structural adjustment program. in the course of this drive, korea acquired a new economic structure, capable of responding flexibly to the changing growth environment. necessities for economic development korean economic development was even termed a miracle by some because it was achieved within a very short period. many underdeveloped countries, in particular, have pondered over its main driving forces. it is often said that there are certain prior necessities such as an abundance of either natural resources or capital, and wide markets, without which economic development seems unlikely. there are, nevertheless, quite a few examples of successful economic development being accomplished without these advantages. as well as korea, singapore, hongkong, and taiwan all achieved brilliant economic development in spite of their unfavorable starting conditions. the question of whether a certain

speech commemorating the bank ’ s 72nd anniversary 10 june 2022 rhee, chang yong governor bank of korea dear fellow members of the bank of korea, today marks the 72nd anniversary of the bank of korea ’ s establishment. first of all, i wish to express my sincere gratitude to our predecessors who devoted themselves to the development of the bank of korea and have supported and encouraged the bank. i would also like to thank staff from all parts of the organization, from policy and management to field operations, for their hard work in their respective areas despite the difficult circumstances caused by covid - 19. let me also express my sincere appreciation to the families who have supported our staff so that they can faithfully fulfill their duties. looking back historically, the bank of korea has always since its foundation made every effort as a central bank, while responding to turbulent economic conditions. the bank of korea has faithfully carried out the role and functions that were required by the times. in the 1960s and 70s, our bank provided funds for achieving high - speed growth, and in the 80s and 90s, our bank devoted its attention to establishing a foundation for price stability. after the 2000s, it promoted financial stability and boosted economic vitality. and during the recent covid - 19 pandemic, our bank took unprecedented measures to mitigate the shock and pursued the preemptive normalization of monetary policy thereafter. i think that these efforts have provided one of the cornerstones for our economic development and stability. however, the bank of korea is currently facing another challenge. although the korean economy has been recovering thanks to the easing of pandemic restrictions and resumption of economic activities, external uncertainties surrounding the global economy are higher than ever. as global inflationary pressures are projected to remain high for a considerable time due to the prolonged war in ukraine, the original role of the central bank as an inflation fighter has made a resurgence. however, on the other hand, some have raised concerns that the global economy might go into a recession amid a slowdown of the chinese economy and accelerated interest rate hikes by major central banks. accordingly, the trade - off between inflation and growth is increasing, which is likely to put more pressure on the conduct of monetary policy. 1 / 6 under such policy conditions, our policy decisions and credibility could face a crucial test. it is true that we started monetary policy normalization earlier than other central banks last year, when consumer price inflation was recording around 2 to 3 percent. however