political conflicts and concerns about a leadership vacuum in the state governance are further intensifying instability in the financial and foreign exchange markets. this year, the conditions surrounding our economy are expected to be more challenging than ever. externally, the implementation of the new us administration's protectionist trade policies could make exports more difficult as global trade contracts. 1 / 7 bis - central bankers'speeches the continued economic boom in the united states may lead to a slower - than - expected rate cut by the federal reserve, potentially prolonging the volatility in exchange rates for some time. additionally, global economic conditions, such as in china and europe, are not favorable. the domestic situation is even more serious. while household debt trends have stabilized due to the strengthening of macroprudential policies, continued rate cuts could develop into a risk factor. thus, constant monitoring with vigilance is required. if uncertainty persists due to political developments, this may intensify the negative impact on the economy, overlapping with already challenging external conditions. given the unprecedented rise in political and economic uncertainties, monetary policy needs to be managed with flexibility and agility in response to changing circumstances. we expect to see more trade - offs between policy variables such as inflation, growth, the exchange rate, and household debt. therefore, the bank of korea will continue to flexibly determine the pace of rate cuts in the future while closely examining the development of internal and external risk factors and the resulting changes in economic movements based on incoming data. however, in the current situation, it is hard to stabilize the korean economy by monetary policy alone. recently, the international attention shifted beyond the turmoil in the financial and foreign exchange markets to whether the nation's control tower of governance can regain stability. it is of the utmost importance that the leadership in governance remains stable, as a prolonged government vacuum in the midst of political conflict can have a negative impact on the country's credibility and directly or indirectly contribute to the overall shock to the economy. as emphasized in the recent report of the bank of korea, minimizing the negative impact of political uncertainty requires building confidence that the economic system, including monetary policy, operates independently and properly without being affected by political processes ( bank of korea, 2024a ). the evaluations may differ depending on political interests, but acting authority choi sang - mok has made a difficult but unavoidable decision based on economics rather than politics to prevent a loss of external credibility and a government vacuum

. this decision will mark the starting point of signaling domestically and internationally that our economic system will continue to function normally, independent of political processes. it is time for the parties to work together to ensure the stability of the nation's leadership. my dear colleagues, while maintaining a flexible approach to monetary policy in the short term, some of us in the bank must also reflect on why the trade - offs between monetary policy objectives have increasingly deepened to the point of constraining the policy. let us take exports as an example. concerns are growing about sluggish export growth as a major factor in the economic slowdown of the year, despite exports reaching an alltime high in terms of value last year. the underlying reason lies in the lack of diversification in our export structure, which remains heavily reliant on a few flagship products, such as semiconductors and automobiles. this concentration has made the overall export performance closely tied to the cycles of specific industries and therefore 2 / 7 bis - central bankers'speeches highly volatile. in addition, china, as a latecomer, has rapidly caught up with us in our major industries. in contrast, we have failed to develop new industries which can drive our future export growth. a stark illustration of this challenge is the comparison of the top 15 companies by revenue in korea and in the united states : over the past decade, seven new enterprises entered the u. s. list, whereas korea added only two. and among them, only one seems to be grown through emerging industries, which means that, in effect, there were almost no new entries. schumpeter's concept of " creative destruction, " which he identified as the major driving force of capitalism, emphasizes destruction as much as creation. the birth of innovative companies inherently involves the exit of those that fail to innovate. the lack of emerging companies and industries in korea raises a critical question : have we avoided addressing the social conflicts that accompany the process of creative destruction under the disguise of pursuing stability? currently, there is significant discussion about increasing corporate value, so - called value - up program, to revitalize the stock market. measures such as raising dividend payouts and improving corporate governance are undoubtedly important. however, it is more essential that new companies lead the stock market through competition and the process of creative destruction, much like how the " magnificent seven " companies now drive the u. s. stock market. at least in the economic sector, we must lift the regulations that