Bank of Korea (BOK) Governor Kim Choong-soo said Thursday that monetary policy is no panacea against crisis as a surge in global liquidity stemming from monetary easing in advanced nations can have negative spillovers to emerging countries.

"Massive increases in official liquidity may have negative spillovers across sectors and national borders. In this light, we should keep in mind that monetary policy is no panacea," Governor Kim said at the opening remarks for the BOK conference co- organized with the International Monetary Fund (IMF).

Following the 2008 global financial crisis, central banks in advanced nations took various non-conventional measures such as large-scale term-loans to troubled financial institutions, outright asset purchases and interventions in credit markets. Those actions led to a surge in global liquidity.

The liquidity arising from monetary easing in advanced countries flowed into emerging economies, strengthening the interconnectedness between advanced and emerging countries. As a result, financial disruptions in one country or region would be no longer a problem of the country or region alone, the governor said.

"Extraordinary monetary easing by major central banks does appear to have helped their home countries contain the fallout from the crisis. But many emerging countries were forced to confront adverse financial spillovers from large and sharp swings in the global liquidity condition," said Kim.