The objectives of this report are threefold: to review the dimensions of the monetary and trade management tasks, to evaluate the ability of existing institutions to cope with the challenges, and to assess the oportunities provided by the external surplus situation for efficiency enhancing reforms. Chapter 1 of the report reviews the current economic situation and it's implications. Chapter 2 provides a discussion of Korean monetary institutions and instruments, and of changes in the structure of the monetary situation in recent years and of their implications for monetary control and resource allocation. Factors critical to success in the context of financial liberalization are identified, and appropriate recommendations are made for effective future monetary management. Chapter 3 contains an analysis of the main issues that arise in the present and anticipated conduct of monetary policy. Among such issues are the desirability and feasibility of sterilization, the role of capital controls, the effectiveness of monetary targeting, and the choice of a monetary indicator. Chapter 4 reviews the causes and consequences of Korea's trade imbalances while Chapter 5 evaluates and rates policies that have been adopted, or could be adopted, to cope with the trade situation.