>Monetary policy is no longer the decisions to determine money, but just to decide on the short-term interest rates. Notwithstanding this, old principles consider these decisions as being equivalent, based upon the negative correlation between the bank reserve and the interest rate in the money market. Moreover, the BoK staff had a firm belief that the open market operation in the money market was the most desirable policy tool. In practice, however, the interest rate is neither determined by the interplay of demand and supply in the money market, nor is the open market operation an indispensable instrument, given the increasing role of the standby facility. This chapter examines the determination of the short-term interest rate under the 'corridor' system