seong - tae lee : monetary policy in an environment of low inflation opening address by mr seong - tae lee, governor and chairman of the bank of korea, at the bank of korea international conference 2006, seoul, 16 june 2006. * * * greetings ladies and gentlemen, i am delighted to be here to express my warm welcome to all of you attending " the bank of korea international conference 2006 ". i would like to extend particular gratitude to our keynote speaker, professor frederic mishkin of columbia university ; to our luncheon speaker, president un - chan jung of seoul national university ; to president william poole of the federal reserve bank of st. louis ; and to our other chairpersons, speakers and discussants, for taking time out from their busy schedules to be with us today. this year's conference, marking the 56th anniversary of the bank of korea's establishment, deals with the theme of " monetary policy in an environment of low inflation ". many central banks including the bank of korea are currently facing difficulties conducting monetary policy in the new environment characterized by low inflation. in this regard, i believe that today's conference is very meaningful and most timely. conducting monetary policy under low inflation as we are all aware, inflation throughout the world has declined since the mid - 1990s. this is mainly attributable to the emergence on the global stage of vast low - wage economies such as china and india ; to productivity gains made possible by information technology ( it ) development ; and to intensified competition in both domestic and global markets. in addition to all of these factors, the increased credibility of central banks is also believed to have contributed to low inflation. over the years, central banks around the world have been resolute in their pursuit of price stability, while working hard to enhance their capabilities in the conduct of monetary policy. together with the continuing price stability, this has helped lower the inflation expectations of economic agents. the case is much the same in korea. both consumer price and core inflation rates are running at levels some two percentage points lower than those we saw here prior to the currency crisis. particularly, the rate of core inflation nowadays is moving substantially below the lower bound of the bank of korea's target range. in the last few months, upward price movements have been observed in several countries. however, rising prices on a scale similar to those of the past are no longer expected to reappear for the time being, as firms continue their efforts to improve productivity with

to include many different vegetables. he is now looking into expanding into commercial peanut farming. i am told mr chand is always looking to expand the farm by testing different crops. mr chand ’ s venture was assisted greatly by the lautoka staff of the microfinance unit and the ministry of agriculture. through the microfinance unit west sanjay was identified as a candidate for the fdb small business of the year awards for 2008 and he was successful in receiving the farming small business award sponsored by the reserve bank of fiji. there are several other very good success stories but these two cases, i just illustrated, go to show how we can assist small and micro businesses to grow with the necessary support and guidance from the various agencies of government, financial institutions and ngos. let me at this stage briefly talk about the anz rural banking scheme in fiji. access to banking services in the rural areas is very critical in enhancing the growth of microfinance. in view of this, the reserve bank of fiji has been discussing with the commercial banks in fiji for a number of years on how best they can provide access to banking services to our rural people. the reserve bank was very pleased that the anz bank took great initiative in this regard by launching the anz rural banking services in 2004. both the reserve bank and the government played an important facilitating role in this initiative. i am pleased to say that the anz rural banking scheme is now an internationally recognized model for delivery of banking services to the rural sector. here, i would like to convey my special thanks to the undp for its role in making the anz rural banking a success. the undp ’ s financial literacy programme assisted in the success of this scheme immensely particularly in the education of villagers in the rural areas on the importance of managing their finance. to date, anz has face - to - face relationship with over 300 communities and 200 schools each month. in just under 4 years, anz rural banking initiative has grown substantially to over $ 9m deposits with over 70, 000 rural customers. in addition, total lending has reached over $ 2m and its rural banking team continues to serve with vigour in areas across fiji – in suva, nausori, sigatoka, ba, labasa, savusavu and including taveuni & kadavu. the reserve bank of fiji is very grateful to the anz rural banking scheme for the commitment shown in areas that are not normally serviced by commercial