the sake of the national economy. in any country, the results of research undertaken by its central bank should be put to good use by a wide range of economic agents, in the government, academia and the financial markets. by accessing the information provided by the central bank, economic agents are assisted in their own economic activities, while coming also to thoroughly understand both the significance of the central bank ’ s existence and its policy intentions. consequently, reinforcement of the bank of korea ’ s research capacities will contribute to increasing its monetary policy effectiveness, while at the same time enhancing its credibility and prestige. the bank of korea must also equip itself as soon as possible with the capacity to assume its proper role in international financial circles. from the experience of this global financial crisis, we have realized how crucial it is to make connections with major central banks and international financial organizations. in this respect the importance of strengthening the cultivation of our international capabilities cannot be overemphasized. dear friends and colleagues, while striving consistently toward these development objectives, from a medium and longterm perspective, we must also pay close attention to a number of tasks facing us, whose pursuit should be emphasized in the second half of this year. recently, we have witnessed sovereign debt problems in several southern and central european countries and rising tensions surrounding the korean peninsula. the financial markets have as a result shown repeated patterns of unrest – characterized by the heightened volatility of price variables including share prices and exchange rates. in consideration of the linkages between the share, bond and foreign exchange markets, we must closely analyze the possibility of risk spreading between these markets, and if necessary act energetically to ensure market stability through such means as our open market operations. interest rate policy will be operated by taking into overall consideration prices, economic activity and financial market conditions. in this process, particular attention needs also to be paid to the impacts of internal and external risk factors on the trend of economic recovery, as well as to the possibility of imbalances arising from our continued financial easing stance. at times like the present, when there is great uncertainty surrounding the economy at home and abroad, the likelihood is strong of economic agents reacting quite sensitively to even mild shocks. especially in this situation, we must devote ourselves even more to strengthening our communication with the markets, in order to prevent any amplification of financial market volatility due to transitory developments. at the next meeting of finance ministers and central bank governors, ahead of the

the world. all political, economic and social phenomena are caught up in a process of endless change. and nowadays, with the rapid progress of globalization and informatization, the pace of that change is accelerating still further. under these circumstances, if we follow the old ways of thinking and patterns of behavior, from when the pace of change was slow and predicting its directions was to some extent feasible, we cannot but slip back onto a path of decline. we need to think deeply now, to identify what changes in the bank of korea ’ s role this new era demands, so that our bank may stride proudly forward to take its place as a leading central bank in the 21st century. the theme of the “ changing role of central banks ” was in this regard chosen for the 2010 bank of korea international conference, held on may 31 and june 1 in celebration of our bank ’ s 60th anniversary. this was one part of our efforts to discern the new role of our bank in the changed environment following the recent global financial crisis. dear friends and colleagues, the global financial crisis following the lehman brothers collapse inflicted unprecedented shocks on the world economy, raising fundamental questions concerning the economic theories and principles that had long been received wisdom. in this context, perceptions as to the desirable role of the central bank are now shifting greatly. until now, the belief has been that the central bank can facilitate sustainable growth by attaining price stability through its operation of monetary policy. this crisis has demonstrated, however, that even under low and stable inflation, imbalances such as sharp run - ups in asset prices can occur, and that this can bring about a financial crisis and severe real economic downturn. in consequence, the argument that ex - post monetary policy response to crisis is by no means simple and gives rise ultimately to massive social costs has gained influence. the opposing view, that a pre - emptive policy response to asset price bubbles could have too many negative side effects, has meanwhile lost support. against the background of such changing perceptions, argument has arisen recently at home and abroad, about the proposition that the central bank should exercise its financial stability role in a more assertive manner. to move ahead with strengthening its financial stability role to meet the needs of the times, the bank of korea has many tasks to carry out. above all, the bank should establish the appropriate scope of its financial stability role, while at the same time obtaining the required policy tools and expanding the range of the counterpart financial institutions embraced by its policy –