myun - shik yoon : opening address - bok - snu institute for research in finance and economics international conference " changing inflation dynamics " opening address by mr myun - shik yoon, senior deputy governor of the bank of korea, at the bok - snu institute for research in finance and economics international conference " changing inflation dynamics ", seoul, 3 november 2017. * * * introduction good morning, ladies and gentlemen. i am very pleased that the bank of korea and seoul national university are co - hosting this international conference today on inflation dynamics, which have recently drawn attention from academia and central banks around the world. i welcome you all most sincerely. let me express my special gratitude to professor chan wook park, vice president of seoul national university, who will deliver some welcome remarks shortly. i would also like to thank professor kiyotaki, our keynote speaker, and all of our session moderators, speakers, discussants and panelists. i am very grateful as well to professor yeongseop rhee, director of the snu institute for research in finance and economics, and his staff, for their efforts in so thoroughly preparing this conference. recent inflation conditions the global economy has been emerging recently from a long - term economic slowdown, as economic conditions in both advanced and emerging market economies are now improving. this is assessed as due in large part to the active and bold monetary policies to achieve economic recovery pursued by the world ’ s central banks, which have been often referred to as ‘ the only game in town. ’ when we look at inflation, however, we find that it has not emerged from its much reduced level seen since the global financial crisis. and there have thus been active discussions recently on the weakened linkage between economic activities and prices, and on the changes in inflation dynamics that have led to talk of so - called “ missing inflation. ” in korea as well, our economic activities continue to improve steadily, thanks to the favorable global conditions for example and despite the recent uncertainties surrounding our domestic and overseas conditions. but core inflation, which reflects our demand - side inflationary pressures, is still in the mid - 1 % range. research on the recent persistently low inflation discussions of the causes for the divergence between economic conditions and prices are developing actively these days. the most representative argument concerns a so - called phillips curve flattening, involving a weakened relationship between economic slack and inflation. specifically, it is said that the degree to which economic

exports, on our employment and on our standard of living. this difficult and delicate situation requires that all stakeholders look beyond their narrow self - interest and share in the pain of adjusting to the new realities. it is a matter of continuing surprise to me that in the fifth year of an unprecedented financial and economic crisis of global proportions, some of our banks are still insolently reporting record profits. i am happy however to see that, at least on this score, i am no longer a lone voice in the desert. others have recently joined me in denouncing this state of affairs. the competition commission has just completed an exercise on the bundling of insurance products where some banks were suspected of taking unfair advantage of their customers by selling them possibly overpriced insurance products from associated suppliers. it is currently investigating into credit card charges – another area where malpractices are rife, at least internationally. the government authorities have also stepped in. they set up a second commission of inquiry on the procedures and practices of sales by levy to which banks have recourse when they foreclose on properties secured as collateral. it started work earlier this month. you may rest assured that the bank will take corrective actions to remedy the situation. it may be appropriate here to point out a growing trend to impose very hefty fines on global banks in other countries for all manners of misdemeanours and transgressions, ranging from conspiracy to rate - rigging. bank ceo ’ s and chairmen have been seen off the stage for their failures and violations, including money - laundering offences. these are not just corporate banking failures ; corporates only act through individuals. these are therefore also individual failures. criminal prosecution of the individuals responsible is something that we shall be hearing more about in the weeks and months ahead. to my mind, this places individual responsibility at the centre of things. the reforms that are now being envisaged to prevent future crises, will hopefully address this issue. we feel strongly that banks – and those working in them at whatever level − should be held accountable for their actions. eight months ago, at the bank ’ s annual dinner for economic operators, i had invited bank executives and directors to reconnect with reality – and not to do things that would resurrect the image of banksters. i understand some bankers had then toyed with the idea of a walk - out. two weeks ago, the very respectable economist magazine – in its uk edition