therefore, the year - on - year rate of increase in nominal wages is expected to gradually show a clear uptrend. against the backdrop of these employment and income developments, the virtuous cycle of economic activity in the household sector is expected to remain in place. nevertheless, the bank will continue to carefully examine how the decline in real income that the consumption tax hike has brought about affects households ’ spending behavior. corporate sector next, i will explain the virtuous cycle in the corporate sector. exports have shown some weakness and the recovery in exports has been delayed. that being said, as i will explain later in more detail, exports are expected to head for a moderate increase. despite the sluggishness in exports, the virtuous cycle in the corporate sector has remained in place. in fact, corporate profits have continued to improve. looking at listed companies ’ results for the april – june quarter of this year, consolidated profits have continued to rise, mainly due to the good performance of overseas sales, and have generally been at favorable levels. business sentiment has also remained favorable on the whole, although it temporarily deteriorated – particularly in the non - manufacturing sector – due to the effects of the decline in demand following the consumption tax hike. business sentiment among large manufacturing firms has remained on an upward trend despite the weakness in exports, reflecting the fact that profitability continues to be favorable. with corporate profits continuing to improve and business sentiment being generally favorable, business fixed investment, particularly in the non - manufacturing sector, has increased moderately. moreover, even in the manufacturing sector, which had been lagging, a clear recovery in business fixed investment can be observed ( chart 4 ). with corporate profits continuing their improving trend, business fixed investment is projected to follow a moderate increasing trend as the effects of monetary easing grow stronger through the decline in expected real interest rates. the june tankan survey shows that aggregate investment in fiscal 2014 is scheduled to increase. therefore, the virtuous cycle of economic activity in the corporate sector is expected to remain intact against the backdrop of the improvement in corporate profits and favorable business sentiment. bis central bankers ’ speeches outlook for and concerns about economic activity japan ’ s economy is expected to continue its moderate recovery trend, since the virtuous cycle of economic activity in both the household and corporate sectors is likely to remain in place, as i just mentioned. at the july monetary policy meeting ( mpm ), the bank conducted an interim assessment of the april 2014 outlook for economic activity

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