The world economic order has been changing since the mid-1980s, but the government could not undertake proper policy actions against the Uruguay Round, and financial and service liberalization. Since Korea has become a member of the OECD(from 1996), the Korean economy has become more vulnerable to external influences. The expected considerable increases in external capital inflows and wide fluctuations in exchange rates have constituted major challenges for monetary policy. The deregula tion and liberalization of the financial sector have also sped up the increase in the overall efficiency of the sector to certain extent However, the 1997 financial crisis still took place in Korea