seong - tae lee : koreaa€™s experience in relation to macro - prudential supervision luncheon speech by mr seong - tae lee, governor and chairman of the bank of korea, at the imf - fsc / fss international conference, seoul, 7 november 2006. * * * greetings i am delighted to see eminent figures from central banks and financial supervisory agencies, together with noted scholars from around the world, gathered here at this conference. korea's experience of financial crisis and the importance of macro - prudential supervision today i would like to tell you about korea's experience in relation to the theme of this conference, macro - prudential supervision. over the past ten years, we in korea have suffered two major episodes of financial instability. let me brief you on what lessons we have drawn from these difficulties. when the financial crisis, which took the form of banking and currency crisis, broke out toward the end of 1997, financial intermediation contracted abruptly. the economy was plunged into recession with the collapse of a large number of companies and financial institutions. the underlying causes of the financial crisis included poor risk management of financial institutions, macroeconomic disequilibria, and the lack of a crisis management capacity on the part of the policy authorities. renewed financial turmoil broke out in 2003 when credit card companies were hit by huge losses. stock and bond prices tumbled and investors rushed to pull out of money - market funds that were heavily overweight in bonds issued by credit card companies. while the 1997 crisis had been brought about by the inability of financial institutions to manage corporate sector risk adequately, the primary reason for the credit card crisis was a failure of their household - sector risk management. the instability was compounded by their herd behaviour in expanding their share of the household credit market. in fact, these two financial disturbances were overcome within a fairly short space of time thanks to the bold and decisive restructuring of financial institutions and companies, and the supply of liquidity by the central bank to deal with the credit crunch. the aftershocks of these crises, though, rumbled on for a long time and they still weigh down the dynamism of the korean economy. in the course of the crises, the labour market worsened and household credit delinquencies increased. this resulted in a prolonged contraction in consumer spending. firms became extremely risk averse in their investment behaviour, and this has weakened the growth potential of the economy. considering that the objective of macro -

chang yong rhee : review on inflation targeting operations keynote speech by mr chang yong rhee, governor of the bank of korea, at the press conference after " review on inflation targeting operations ", seoul, 20 december 2022. * * * biannually, bank of korea releases its review on inflation targeting operations, and via a press conference, provides explanations in detail to the general public to help enhance their understanding of the current inflation situation. looking back on the year, with global consumer price inflation well above inflation targets and the subsequent response of sharp policy rate hikes by the bank, we are well aware of the unignorable costs that the general public has been bearing throughout. however, we hope that it is understood that these policy responses were inevitable in order to avoid much higher costs that would have likely been incurred to our economy down the road. recently, there have been some signs that the upward trend in inflation may be easing to some extent. nevertheless, uncertainties still remain high. today, we would like to explain in detail our assessment of recent inflation developments. first of all, consumer price inflation from january to november this year increased by 5. 1 % year - on - year, the highest annual rate of increase since 1998. looking at developments throughout the year, inflation surged from 3 % at the start of the year to 6. 3 % by mid - july, but then eased somewhat, declining to 5. 0 % last month. the recent slowdown in consumer price inflation is mainly due to significant falls in international oil prices and agricultural prices, which skyrocketed earlier this year due to russia's invasion of ukraine and last summer's torrential rainfall, ( respectively ). more specifically, oil prices had soared close to 40 % year - on - year in june this year, but rose by only 5. 6 % last month, while agricultural prices turned to a year - on - year drop of 2 % last month from more than a 10 % rise last summer. on the other hand, core inflation for items other than food and energy has steadily risen until recently, from the mid - 2 % level at the beginning of the year to the mid - 4 % level last month. this reflects the accumulated cost hike pressures in goods and services, which are a result of increases in wages and raw material prices and heightened demand - side pressure following the lift of social distancing measures. in particular, dining - out prices have sharply increased, hitting a 30 -