masaru hayami : financial system stability and future agenda need to strengthen the capital base speech by mr masaru hayami, governor of the bank of japan, at the fiftieth anniversary symposium of the institute for financial affairs, tokyo, on 14 july 2000. * * * i am pleased to be invited to this symposium celebrating the 50th anniversary of the institute for financial affairs. before i begin, allow me to explain one rule regarding monetary policy meetings under the new bank of japan law, which became effective in april 1998. the rule dictates that the governor, deputy governors and members of the policy board should not, in principle, make remarks about monetary policy and operations immediately before or after monetary policy meetings. this is intended to avoid any unnecessary speculation or confusion which might be generated by such remarks. we call this the “ blackout rule ”. since there is a monetary policy meeting next monday, today happens to fall into the period when this blackout rule applies. therefore, i will not talk about any matters relating to monetary policy and will refrain from answering any questions on the subject. i would appreciate your kind understanding on this. since i began my career as a central banker a long time ago, i have received a lot of intellectual stimulus from reading the publications of the institute as well as participating in the study groups and conferences organized by it. and i would like to take this opportunity to thank the institute for publishing the book on the balance of payments which my colleagues in the then foreign department wrote and i edited some 20 years ago in 1977. on the occasion of the institute ’ s 50th anniversary, when we look back at the past 50 years of japan ’ s economy, we really have experienced a diversity of situations. around the time of the korean war, i was in osaka and witnessed the reconstruction of the textile industry and the economic boom supported by the special procurements occasioned by that war. other events in the past 50 years include the reconstruction period following the chaos just after world war two, the high growth period, the oil shocks, the plaza agreement and the appreciation of the yen, the emergence and bursting of the bubble, and the current prolonged recession. when talking about japan ’ s economy, some call the past 10 years the “ lost decade ”, and during this period average annual growth was a meager 1 %. against this background, financial institutions have been gradually changing their management strategy while bearing the heavy burden of the past legacy. though japan ’ s financial system has faced an

peter praet : the ( changing ) role of central banks in financial stability policies speech by mr peter praet, member of the executive board of the european central bank, at the 14th annual internal banking conference, organised by the federal reserve bank of chicago and the european central bank, chicago, 10 november 2011. * * * more than four years have passed since the onset of the financial crisis. over these years, central banking functions have been stretched to the limits. recent developments demonstrate how fragile our financial system remains, not only because of debt legacy but more worrisome because of its mere design. the public debt crisis in a number of advanced economies is also raising fundamental questions about the role of public debt instruments in our financial system. looking backwards, one can say that disciplining mechanisms in debt markets have clearly failed, often as a result of mutually reinforcing market and government failures. too much debt in the public sector is the symptom of both ineffective public governance and market discipline. budget rules, such as the no - bail - out provision of the maastricht treaty, didn ’ t contain the accumulation of debt. in the banking sector, the disciplining role of sight - deposits has proven to be time - inconsistent in the presence of the negative externalities that the failure of a large institution would create. although the role of monetary policy in the build up of the crisis is still debated, it does influence in an important way the price of leverage. 1 lack of attention and preparedness to tail - events has been particularly striking. while central banks have always paid attention to the possibility of extreme events in payments and posttrade infrastructures, too little efforts have been devoted to the prevention of the conditions under which emergency liquidity assistance would be provided to the financial sector. other authorities were concerned, such as supervisors at the micro - level and ministries of finance. the necessity of constructive “ ambiguity ” was also invoked to keep a low profile. achieving and preserving financial stability has now become a key policy objective in our societies. building up separate macroprudential policy functions is considered one of the main elements of the wide ranging policy reforms in pursuit of this objective. the idea is to entrust the authority in charge of macroprudential policy with the task of monitoring, identifying and mitigating systemic risks as they emerge. macroprudential policy, by taking a system - wide perspective, thereby complements microprudential policy which is mainly oriented