improving momentum of expectation formation, the bank judged it appropriate to expand qqe and decided such expansion. before the expansion, jgb purchases had been conducted with an average remaining maturity of about seven years ; as a result, there had been a substantial decline in yields in the somewhat short - term zone, while yields in the somewhat longer - term zone remained at relatively higher levels. now that the average remaining maturity has been extended and set within a flexible range, this will put further downward pressure on interest rates across the entire yield curve. furthermore, in order to conduct flexible jgb purchases, the bank decided to announce the monthly schedule and details of jgb purchases for the following month on the last business day of each month. 5 b. effects and costs of the expansion of qqe i would now like to explain how i assessed the expected effects as well as the potential costs and risks of the expansion of qqe before voting in favor of the decision. let me first describe the effects of the expansion of qqe. with the introduction of qqe in april 2013, which has put further downward pressure on interest rates across the yield curve and strongly influenced asset prices, financial conditions in japan have become more accommodative, and this has strongly supported improvements in corporate profits, employment, and wages. amid increasing capacity of firms and households to generate income and a widening acknowledgment of the prospects for a sustainable improvement in demand, upward pressure on prices has been increasing. 6 a baseline scenario for the outlook for economic activity is that a virtuous cycle from income to spending will be maintained, and improvements on the supply side of the economy, which represent the see “ outline of outright purchases of japanese government bonds, ” released by the bank on october 31, 2014. for more details of the increasing upward pressure on prices and the effects of qqe so far, please refer to ryuzo miyao, “ japan ’ s economy and monetary policy, ” speech at the 2014 autumn annual meeting of the japan society of monetary economics, bank of japan, october 18, 2014. bis central bankers ’ speeches potential strength of the economy, are expected to progress steadily in areas such as firms ’ profitability and households ’ labor supply. in this situation, the expansion of qqe is expected to produce stronger effects. specifically, given an increase in firms ’ profitability, extremely accommodative financial conditions will drive their positive efforts and risk - taking

introduced in the form of the mutual banks act. secondly, banking institutions adapted their own internal policies to provide for greater participation in the social upliftment programmes of the country, for example by entering into an agreement with government to provide a minimum amount per year for low - cost housing. on the other end of the spectrum, banks also introduced new electronic data processing systems, for example automated teller machines, and “ smart card ” facilities for a gradual introduction of electronic money. thirdly, bank regulation and supervision underwent major changes over the past ten years to apply the world - wide supported directives of the basle committee. at this stage, bank regulation and supervision is based primarily on risk identification and management, with clearly defined roles for shareholders, boards of directors, senior management and internal and external auditors. fourthly, the south african banking scene was opened up for foreign banks, and south african banks, in turn, were allowed to establish branch offices, subsidiaries and representative offices in many countries around the world. today, in addition to about 35 domestic banks, there are more than 10 established branches and subsidiaries of foreign banks operative in south africa, and about 60 international banks with representative offices in the country. south african banks have opened up 29 branches / subsidiaries in 13 other african countries. it is still too early to judge the effect of this wider competition on the south african banking system. there are signs, however, that it is beginning to squeeze the margins of banking business. in particular, the share of foreign banks in wholesale banking, foreign exchange business and financial market activity increased significantly. this was accompanied, however, by an almost explosive increase in the total volumes of business in these markets, which provided for continued growth in existing and newly - established institutions. 2. 4 the development of financial markets once again, the new south africa had the advantage of inheriting well - established and relatively sophisticated financial markets. this did not mean, however, that no reforms were required in these markets. the most striking adjustments occurred in the capital market. a “ big - bang ” revolution took place in the johannesburg stock exchange last year when : the market for trading in equities was separated from the bond market ; an electronic screen trading system replaced the traditional open - floor outcry system ; corporates and non - residents were allowed for the first time to become broker - members of the exchanges ; provision was made for negotiated commissions and principal versus broking trade by members of the exchange. over the past few years