Federal Reserve Chairman Ben Bernanke said the world economy depends ever more on emerging markets to maintain strong domestic growth and economic and financial stability.
Improvements in emerging market policies and policy frameworks ... have ramifications beyond the emerging market economies themselves, Bernanke said in video-taped remarks prepared for delivery to a conference sponsored by the Bank of Korea in Seoul on Monday morning.
Bernanke did not discuss the outlook for the U.S. economy or interest rates.
Actions taken by the South Korean government and the Bank of Korea since the Asian financial crisis of the late 1990s helped Korea weather the crisis that swept economies around the world in 2007-2009, he said.
Korea had amassed a budget and trade surplus and pushed banks to prepare for shocks, Bernanke said. In addition, the Korean central bank's move to focus on domestic price stability rather than on stabilizing exchange rates also helped the country during the turmoil, he said.
As a result of a formal inflation-targeting regime adopted by Korea's central bank in 1998, it could lower rates during the crisis without scaring investors off, Bernanke said.
In earlier crises, foreign investors were not inclined to give emerging market policy makers the benefit of the doubt when they promised low inflation and sustainable fiscal policies, he said.
(Reporting by Mark Felsenthal; Editing by Leslie Adler)