the advance of the fourth industrial revolution, new growth engines can no longer be created through larger inputs alone. we need to devote all our energies to 2 / 8 strengthening productivity across the economy and fostering new industries. we must provide unwavering support to create an environment in which the private sector can unleash its creative and innovative potentials, thereby expanding investment, creating quality jobs and heightening efficiency. shifting to an innovation - based economy will entail numerous challenges. however, delaying this process to avoid headwinds will distance us from greater growth potential. dear members of the bank of korea! let me talk now about the main tasks that the bank of korea will need to focus on this year. we will have to conduct our monetary policy so as to support economic recovery and to ensure that inflation stabilizes at the target level over a medium - term horizon. since it is forecast that our economy will grow at a pace below the potential level, and that demand - side inflationary pressures will not be high, we will need to maintain our accommodative monetary policy stance. in this process, we will determine whether to adjust the degree of monetary accommodation, based on an assessment of wide - ranging factors such as external risk developments, domestic macroeconomic trends, and any changes in financial stability conditions. 3 / 8 i would like to once again highlight the critical importance of accurate diagnosis and forecasting of economic developments for the timely and effective operation of monetary policy. we will need to improve the precision of our forecasting by expanding the scope of financial and economic indicators and utilizing information technology. the remarkable development of digital technology offers us tools to use the vast amount of real - time information related to economic activity. we need to equip ourselves with the abilities to analyze and forecast precisely based on ai and big data. in terms of economic analysis and forecasting, we must consider the possibilities that the behaviors of economic agents and the relationships among major economic variables may have changed significantly from the past. we will also need to pay closer attention to policy communications. in this persistently low - interest and low - inflation environment, we may face an increased possibility of conflict between the two goals of price stability and financial stability. therefore, a clear rationale behind the bank ’ s decision - making should be presented so that economic agents can easily understand its policy decisions. since inflation is hovering below our target objective, we need to thoroughly analyze and review price conditions and explain them to the public in detail.

early 1980s, many latin american countries found themselves in a situation where their foreign debt exceeded their earning power and they were not able to repay it. even though quite a few researchers tried to explain the crisis as a result of the economic development strategy of import substitution industrialization and heavy reliance on raw material exports, the direct causes were the two kinds of abnormalities. on the one hand, the mishkin, frederic s., 1999, “ global financial instability : framework, events, issues, ” journal of economic perspectives, vol. 13, no. 4. governments and public sector typically took a large share of expenditures and investment in the economies, and thus the scale of the budget increased continuously. on the other hand, the governments were unable to collect the necessary taxes to pay for the increased spending. 7 the consequence of this double problem was increased budget deficits, which in turn limited the capacity of the states to finance the deficit through raising debt. when the government could not resort to tax collection or further debt accumulation, printing money was the only option left, consequently resulting in hyper - inflation. the evolution of the international financial environment at the time also played a role in the process. during the 1970s, oil prices skyrocketed and oil - exporting countries invested their money in international banks, which recycled a major portion of this as loans to latin american governments. however, at the end of the 1970s, the us fed led by paul volcker raised interest rates to curb inflation. as a result, interest rates in global financial markets rose and the world economy went into a deep recession. the debt obligations that should have been met by the latin american countries increased dramatically and it became much harder for them to pay back their debts. consequently, in august 1982, mexico declared that it would no longer be able to service its debt. and international commercial banks reduced new lending to latin america significantly or halted it altogether. as much of the latin american debt was short - term, a crisis followed when its rollover was refused. sudden stops and massive capital outflows brought about a rapid depreciation of the latin american currencies, thereby further raising the real interest rate. in terms of per capita real income, latin america experienced negative growth of almost 9 percent between 1980 and 1985. after the latin american debt crisis, the so - called “ washington consensus ” emerged among economists and washington, d. c. - based institutions such as the imf and the world bank. the term washington consensus