term, through clear exchanges of information. however, when a “ minsky moment ” occurs the central bank and the market cannot move in the same directions. when market stability is a concern, it is desirable that the central bank lead the market. it is not desirable for the central bank to be led by the market. in times of uncertainty and instability, market tries to continuously test the central bank. central bank should not be misguided by efforts to undermine the central bank under the name of communication when there is only difference of opinion. 38, 39 the central bank should conduct its policy harmoniously, by exchanging information with the market on the one hand, while accumulating enough experiences and knowledge to maintain market discipline on the other. although they are not easily compatible in reality, they are the ways of becoming a leading central bank. over the last four years i have worked without rest to carry out over 100 reform tasks. the expression “ reform fatigue ” might be heard in this regard, but i think it would be more appropriate to express this as the institutionalization of reform. tasks should be carried out while keeping always mind the need to change. fatigue comes when one is passive not when one is active in carrying out their tasks. please remember that reform is like education : it is a journey, not a final destination. here are some unfinished tasks : first, in order to establish the bank of korea as a world leading knowledge institution, our educational and training program should be put securely in place. in the world ’ s leading should be independent from the market in order to maintain the term structure of interest rates. and i think that we should keep his argument in mind. communication is an effective policy instrument under conditions of a zero lower bound, but whether it can be used as a monetary policy tool in emerging economies needs to be reviewed more. during the period of the great moderation, constructive ambiguity was for a long time regarded as a central bank communication virtue. this seems to aim at reducing risk of unnecessary noise from errors of interpreting central bank communication meant to clearly explain complex financial conditions, and at preventing herd behavior given market propensity to overreact. many fed reports have emphasized that guidance is a threshold, not a trigger. this emphasis is to ask the market not to understand it as commitment by the central bank. please refer to yellen ( april 2013 ), “ communication in monetary policy, ” society of american business editors and writers, and bernanke ( nov. 2013

package, the korean economy is expected to move onto a moderate recovery track in the near future, though there may be some impact from the damage inflicted by the recent typhoon. the problems we confront, though, are by no means simple. above all else, we have the issue of the high social costs exemplified by the recent confrontation between labor unions and employers and the prevalence of actions placing the interests of vested interest groups above those of society as a whole. the timely resolution of this conundrum is crucial to the long - term health and viability of the country ’ s economy. we also have to tackle the potential threats to financial stability including the mounting number of koreans on credit blacklists, swelling overdue loans in the household sector and the frail management status of certain financial institutions. one of the characteristics of korean society inherited from a history of adversity is that when people share the perception that the country faces a crisis, they unite as one in enduring whatever hardship it takes to overcome it. this was the wellspring from which korea drew the strength to surmount the currency crisis. and helped by these social dynamics, koreans will, i am confident, deal skillfully with the present challenges. there are already signs that a social consensus has been reached on the need to overcome the problems that i have mentioned for the good of the korean economy. the government is now also directing its attention toward curing the evil of spiralling social costs. 2. monetary policy in the light of the shifting economic environment, the bank of korea has conducted monetary policy so as to support the economic recovery while smoothing out the internal and external disequilibria. early this year, because of the current account moving into the red and the upward price pressures brought about by the steep run - up of international oil prices, we had difficulties in making use of the interest rate policy lever to deal with the downturn in economic activities. we therefore left our target rate, the overnight call rate, on hold. but the current account shifted into surplus and price movements settled down once international oil prices showed downward stability following the early end of the war in iraq. for this year as a whole, too, our forecasts pointed to core inflation being held stable within its target range at the 3 percent level and to the current account maintaining its underlying surplus trend since the 1997 currency crisis. under these circumstances, the bank of korea moved to revive business and consumer confidence. in may and again in july, it reduced its overnight call rate