, and in which he said “ the issues are global and so interlocked, ” was a very useful reference to me, full of insight and wisdom, emphasizing the importance of a global perspective in establishing strategies and making policy decisions. it was also what directly motivated me to decide to deliver this farewell lecture. chairman bernanke ( 2014 ), in the annual meeting of the american economic association few weeks before his retirement, delivered a farewell lecture on “ the federal reserve : looking back, looking forward, ” while governors king ( 2013 ) and subbarao ( 2013 ) delivered theirs on “ a governor looks back – and forward, ” and “ five years of leading the reserve bank : looking ahead by looking back, ” respectively. as an economist, it seemed to me that delivering such speeches is a very desirable practice. this is another reason why i have decided to deliver a farewell lecture instead of just a speech, which has been the custom. considering that in academia it is a general practice to pass on one ’ s experience to students through a farewell lecture when retiring, i think that the central bank community also needs to build the same tradition. part of this lecture is an excerpt from my farewell speech delivered at the bis governors ’ meeting as the bis - acc chair on february 24, 2014, in sydney, australia. since my views on the current economic circumstances and policy challenges have already been circulated in the results of several meetings, including with director generals and general managers, those on my four years at the bok have been published in bank of korea news ( march 2014 edition ), and those on other policy reforms have been presented to bok staff on many occasions, i will not repeat them here. bis central bankers ’ speeches instrument, and had to newly develop non - conventional instruments since their interest rates had already hit the zero lower bound. emes, with their original sin, i. e. their inability to borrow abroad in their own currencies, have had to put priority on dealing with the negative spillovers from aes ’ qe policies. while trying to explore new ways of responding to unpredictable economic changes, they have at the same time had to overcome the difficulty of needing to avoid simply applying their experiences acquired under the unsuited past economic environment. aes and emes are under a global economy where they are interconnected with each other but have had to remain different in terms of their policy instruments. past financial crises that have impacted the overall global economy include the latin

the three - month swiss franc libor rate. the main goal has been, and will remain, price stability. price stability is considered to have been achieved if inflation, measured by the national consumer price index, is below 2 % in the medium term. in achieving this goal, the snb always takes account of the economic development. this is also stipulated in the draft of the revised national bank law. due to the strategy change from money supply targeting to inflation forecast - oriented interest rate steering, shifts in the demand for money have become less problematic, as they are being offset automatically. but although the money supply no longer serves as an intermediate target, its development is an important element duly considered – along with other indicators – in producing the inflation forecast. the centuries - old observation that sustained changes in the price level are linked to changes in the supply of money remains valid. 4. 2. the significance of the exchange rate another important variable in producing a medium - term inflation forecast is the exchange rate. the significance of the swiss franc exchange rate against the major currencies is due to the swiss economy being so small and open. the export share of the swiss gross national product ( gnp ) amounts to approximately 42 %, while the corresponding share is 29 % in germany and only 12 % in the united states. switzerland's major trading partners are the eu countries, which absorb 59 % of swiss exports. with regard to imports, the interdependence is even greater : 75 % of swiss imports come from the eu. via foreign trade, the exchange rate exerts an influence on aggregate demand and, therefore, also on the price level in switzerland. in addition, the exchange rate directly affects import prices. therefore, exchange rate movements have been, and will be, closely monitored by the snb. the rapid succession of interest rate cuts by the national bank since 11 september 2001 was also an expression of concern about an exchange rate - triggered threat to the economy. since price stability was not jeopardised, it was possible to considerably relax monetary policy. 4. 3. steering the exchange rate? although the snb takes account of the exchange rates when determining its monetary policy, it is sometimes called upon to do more than that. it is even requested to concentrate – at least temporarily – exclusively on the exchange rate. the underlying notion is that the national bank could aim at a lower swiss franc exchange rate and that exports would consequently pick up to the desired degree.