the very wide range of factors at play in this recent bout of inflation, including the supply - side and the demand - side factors, i think that a multi - pronged response is likewise called for on the policy front. particularly in terms of macroeconomic and monetary policies, i believe it vital to block off second - round effects such as wage increases, spurred by cost - push inflation spreading to other sectors via inflation expectations and so forth. an important task for the korean economy from a longer - term perspective, meanwhile, lies in securing financial and foreign exchange market stability. korea and the other emerging market countries presently experiencing large global capital inflows, in line with their continued strong growth, are necessarily wary of the possibility of heightened financial and foreign exchange market volatility in the event of any future reversal of these capital flows. and for korea, reducing exchange rate volatility has become an important policy objective, since the korean won ’ s volatility towers well above those of other currencies. the won ’ s intraday volatility vis - a - vis the us dollar was in fact found to be 0. 60 % for 2010, fourth - highest among the 25 major currencies assessed against the dollar. in order to address such issues, the korean government aims to ensure financial and foreign exchange market stability through such measures as regulation of banks ’ foreign exchange forward positions, re - introduction of withholding taxes on foreigners ’ domestic bond holdings, and implementation in the latter half of this year of a “ macro - prudential stability levy ” on non - core foreign currency liabilities. these measures are being employed purely as a matter of macro - prudential policy, and not as capital controls, and they will be legislated and implemented in line with global standards. ( closing words ) while korea was the first among oecd members to overcome the impact of the global financial crisis, it was also the one hit the most severely when the crisis initially erupted, as was seen in the dramatic drop in gdp growth. internationally, countries are now striving not only to overcome the global crisis but also to devise and put into place mechanisms to prevent its recurrence. through the construction of a new financial regulatory framework, dubbed basel iii, we seek to prevent individual financial institutions from becoming insolvent while at the same time keeping systemic risks under control, and to thereby avert future global crises. in overcoming and preventing global economic crises, the central bank ’

choongsoo kim : changes in the global financial and economic landscape and challenges facing the korean economy speech by mr choongsoo kim, governor of the bank of korea, to the american chamber of commerce in korea ( amcham ) general membership meeting, seoul, 16 march 2011. * * * ( greetings ) good afternoon. i would like to thank the american chamber of commerce in korea ( amcham ) for inviting me to be here with you today. my remarks today will focus on the changes in the global financial and economic landscape, and i will also offer some thoughts on the challenges now facing the korean economy. first of all, however, i would like to offer my deepest condolences to the japanese people in their suffering after the earthquake, and my hopes that japan recovers swiftly from the damage caused. it is very much to be hoped that worldwide economic cooperation be directed now toward helping japan in its hour of need. let me begin my remarks now with the changes in financial and economic conditions. policymakers around the world face a whole new set of challenges today, posed by the recent changes in the global financial and economic landscape. this is an evolution that has been ongoing since the global financial crisis broke out. and these difficulties, which are marked by uncertainty, owe to the fact that nowadays, in this post - crisis era, there can be no return to the world economy of the pre - crisis days, but only a transition to a new paradigm to be explored in international forums like the g20. familiar concepts as we know them are now in flux. to cite just one example, the concept of “ too interconnected to fail ” has arisen in parallel with that of “ too big to fail ”. now, the most prominent feature of the global economic environment today is the fact that a two - speed recovery still continues. as you are all well aware, what this means is that the growth paths and growth rates of the advanced and the emerging economies are diverging. and this concept, i would say, is one integral part of the new paradigm that has emerged since the crisis. in this two - speed global recovery, emerging economies now agonize over the instability of their prices, including those of real estate, as they overcame the crisis swiftly and are now enjoying rapid growth. the advanced economies in contrast fret over their own sluggish growth and high rates of unemployment. the task of analysis imposed on us as policymakers thus becomes all the more complicated