of monetary policy could be restored if progress was also made in the following areas : fiscal consolidation programs, structural reforms ( i. e., labor - market reform, deregulation, privatization, and efficiency of public administration ), and region - wide institution building ( or regionally coordinated actions to strengthen the firewall limiting the contagion of a crisis from one country to another in addition to the possibility of efsf / esm primary market purchases ). in other words, it was bis central bankers ’ speeches made clear that monetary policy could contribute to narrowing the output gaps and preventing disinflation. this should be regarded as a temporary measure in providing breathing space, while governments and regional institutions ( such as the european union [ eu ] or the eurogroup ) deal with the structural issues that are necessary to lower the fear premium and raise the potential ( trend ) economic growth. here, the imf could play an important role as a third party in the process. meanwhile, japan also suffers from a weak link between a very accommodative monetary policy and private - sector credit growth ( chart 4 ). however, the root causes of this weak linkage in japan differ from those in the euro area. japan ’ s financial conditions have been very accommodative. the financial sector – which has hardly been affected by the euro area crisis thanks to relatively sound balance sheets, low leverage ratios, and ample deposits – has largely maintained an accommodative lending attitude. therefore, sluggish credit growth is largely a consequence of limited demand for credit ( such as loans to finance business investment and mortgages ), as evidenced by the declining trend in new business fixed investment as a percentage of gdp ( and cash flow ) and the moderate increasing trend in housing investment. this phenomenon is closely associated with the declining potential ( trend ) economic growth, long - standing mild deflation, and persistent output gaps. these features characterize the japanese economy and partially reflect cyclical factors. but more importantly, these features are attributable to structural factors – such as demographic changes ( the rapid pace of aging, the declining working - age population from the mid - 1990s, and the constantly declining population projected from 2011 onward ), structural rigidity ( which hinders smooth inter - industry and intra - industry structural adjustments ), growing global competition, and completion of the catching - up process ( shirai 2012 ). against this background, it is becoming increasingly important to differentiate between cyclic

amando m tetangco, jr : looking back to move ahead in 2016 speech by mr amando m tetangco, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the joint meeting between rotary club of manila and rotary club of forbes park, makati city, 7 january 2016. * * * distinguished officers and members of the rotary club of manila under the leadership of president eusebio tan and the rotary club of forbes park represented today by immediate past president john toing, special guests, ladies and gentlemen, good afternoon. thank you for inviting me to this joint membership meeting of the rcm and its younger counterpart rcfp. as the oldest rotary club in asia, dating back to 1919, rcm will turn 97 years old this year. few organizations last for nearly a century, much less remain dynamic, relevant and influential, like rcm. for this, the men and women of the rcm deserve our congratulations! in this connection, i am delighted that you have made me a part of your history by inviting me every year since i became governor of the bangkok sentra ng filipinas to share my assessment of our economy – its past, present and future. in addition, since i have always accepted your invitation every year, i am marking today my 11th year as rcm ’ s january speaker. thank you rcm. now, what can i tell you about the philippine economy? well, i can say that if the first seven days of this year is any indication, 2016 will be far from boring – it will be riveting and challenging. last monday, in the first trading day of the year, stock markets across the globe did not simply drop ; they plunged – in the us, in europe and in asia. in particular, china shut down trading for the day under its new circuit breaker rule when stocks tumbled beyond seven 7 %. this has been described as the worst opening day for a new year in china, the world ’ s second largest economy. this rattled currency markets as well. today, chinese stock market was shut down again. meanwhile, geopolitical concerns in the middle east add to fears of volatility. analysts warn of more wild price swings as the global economy slows down. on the other hand, these are early days – just the first week in the year. it is way too early to tell if this trend will last. as the greek