This paper extends the structural VAR model of Bernanke and Mihov (1998) to oneunder a small-open economy in order to explore how the operating procedures of themonetary and foreign exchange policy in Korea changed in the aftermath of the 1997 Asianfinancial crisis. It finds strong evidence of apparent regime changes in the monetary andexchange rate policy after the financial crisis. The implications for monetary policy in Koreaare that the operating procedure switched to a call rate target in the post-crisis period, butthat its stance on monetary policy may remain in transition under an inflation targetingframework and a freely floating exchange rate regime. Moreover, the exchange ratepresumably plays an important role in monetary policy or as an intermediate monetarypolicy target in order to stabilize prices.