##sequilibria in the global economy is an overall imperative, not just for eliminating the factors behind the current crisis but also for securing stability of the bis central bankers ’ speeches international financial order going forward. we should therefore step up efforts to resolve the global imbalances in trade and capital movements that were among the root causes of the global financial crisis. although the issue of these global imbalances has repeatedly loomed as a problem in the past, the international community has barely undertaken joint efforts to reduce them. i hope that before long a consensus will be reached, under the aegis of the g20, on indicative guidelines for current account positions designed to resolve the global imbalances. the existing framework of global financial regulation was largely designed with advanced countries and the banking sector in mind. and because of financial innovation and the like, the financial system has undergone great structural transformation with the rapid growth of parallel “ shadow banking system ” encompassing investment banks, hedge funds and special purpose vehicles. in keeping with the reform of the financial environment, therefore, all major financial institutions in the markets, irrespective of their legal forms, should now be made subject to regulation. furthermore, international consensus has also formed on the need for strengthening regulation of systemically important financial institutions ( sifis ). in practice, however, it has not been possible yet to draw up international standards for the selection of sifis, or for the method of their regulation. within emerging market countries, similarly, the need for regulation of sifis has now clearly emerged and very thorough discussion of this issue is called for. in addition, concrete research is required to identify how reorganization of the international financial order will impact the financial structure and the financial and capital markets of emerging market economies. what effects the new capital and liquidity regulations decided on at the recent g20 seoul summit will have on our the current interest rate - oriented monetary policy must also be determined. new factors restricting monetary policy may also be on the horizon. i am thinking here, for example, of the possibility of a conflict with interest rate policy arising from the liquidity control function of a countercyclical capital buffer, which is among the macroprudential policy instruments now being discussed. closing words historically, economic crises have led to crises in the field of economics itself. and economists and economic institutions by and large failed to predict the recent global financial crisis until it actually erupted, owing to their lack of understanding of speculation in the real estate market and

choongsoo kim : the need for more advanced forms of regulatory surveillance and macroprudential stability policy welcome address by mr choongsoo kim, governor of the bank of korea, at the bank of korea ( bok ) – bank for international settlements ( bis ) conference on macroprudential regulation and policy, seoul, 17 january 2011. * * * i bid a warm welcome today to all of you attending this conference, held jointly by the bank of korea and the bis. let me first single out for appreciation our keynote speakers, governor stefan ingves of the swedish riksbank and professor hyun song shin of princeton university. their attendance as lecturers adds special luster to our proceedings. i anticipate that with their abundant experience and keen powers of discernment, these two experts will have great insights for us concerning the new policy tasks and changes in role of central banks since the global financial crisis. my thanks go out in addition to eli remolona, chief representative of the bis asia and pacific representative office ; christine cumming, first vice president of the federal reserve bank of new york ; ignazio visco, deputy director general and member of governing board of the bank of italy ; david longworth, former deputy governor of the bank of canada, and to all of our other chairs, presenters and discussants, for your efforts to make this conference a success. the global financial crisis has shown us the importance of shifting to a new paradigm in macrofinancial stability framework as well as international financial order. in particular, broad consensus in the international community has developed on the necessity of designing various tools, including macroprudential policies to counter the heightened mood of anxiety we now see everywhere concerning systemic risk. this being the case, the theme of our conference, “ macroprudential regulation and policy ”, will be viewed with intense interest by central banks and regulatory authorities responsible for financial stability. i am sure that the invaluable comments and policy proposals raised during this week ’ s conference will be of great help to central banks and those in charge of government policy throughout the world. lessons of the global financial crisis the global financial crisis that we are witnessing is the greatest shock to the world economy since the great depression of the 1930s, in terms both of its intensity and of its duration. even now the financial markets have not fully recovered to their pre - crisis level of activity. nor can we rule out the possibility of the current recovery fa