systems. indeed, these ongoing changes appear to be of a global nature in many respects. in europe, however, they undoubtedly need to be seen against the background of european monetary union, as well. ii. in the international financial markets, since the 1960s, we have been witnessing a fast and furious pace of development. the development here warrants the general designation of “ globalisation ” more than in any other sector. the major financial markets have grown closer and closer together. in fact, the barriers to cross - border capital movements have increasingly been lifted as a result of political measures and technological advances. the global integration of the financial markets is anything but an end in itself. not only does it open up to investors a broad new range of investment opportunities for diversifying portfolio risks. it also improves the refinancing options open to issuers of securities. in addition, it tends to boost securities trading. a high degree of liquidity in trading is a key prerequisite of efficient price formation in the capital markets. and, after all, efficient capital markets are an essential component of a well - functioning economy. global integration has, of course, its drawbacks : the reason for this is that the openness of the financial markets may also serve to spread turbulences. risks may have their roots in major groups of investors, in the shape of overly credit - financed leverage. also, to some extent, in the form of an observed tendency towards herding behaviour. what can a central bank do to counteract the dangers presented by globalisation? the stance of the bundesbank on this has been quite clear. let me say it again : a good policy creates incentives for market players to cope consciously with risks on their own. thus, a good policy need not set new controls on, or obstacles to, international capital movements. rather, a good policy excels in shaping appropriate underlying macroeconomic conditions. for it is precisely when stable monetary conditions are lacking that the risks associated with financial assets become difficult to evaluate. i think this stance is appropriate, at least for the large, developed economies with mature financial markets. however, an important lesson of the crises in asia in 1997 - and thereafter also in russia and latin america - is : for the so - called “ emerging economies ” a gradual and measured integration strategy is to be pursued. further liberalisation of the capital markets promises only success when and where they have reached a recognisably high degree of structural maturity and stability. certainly,

kiyohiko g nishimura : population ageing, macroeconomic crisis and policy challenges speech by mr kiyohiko g nishimura, deputy governor of the bank of japan, at the 75th anniversary conference of keynes ’ general theory, university of cambridge, cambridge, 20 june 2011. * 1. * * introduction : macroeconomic crisis and long - run fundamentals i am honored and thrilled to participate in this conference commemorating the 75th anniversary of the publication of keynes ’ general theory. in particular, being an academic - turned - central banker, the opportunity to participate in this panel on policy responses to macroeconomic crisis, is a great privilege. the task before me, as a central banker, is to describe the responses of central banks to the macroeconomic crisis of 2008, especially their “ unconventional policies ”. in addition, i hope to add some color to our discussion on the consequences of the financial crisis by drawing on the japanese experience, which suggests a long and winding road in the post - crisis period. having set the parameters of my presentation, i would like to start my presentation by expressing my uneasiness over the smugness that i sense among commentators on macro theory and policy. very often, i hear that the worldwide asset market bubbles and resulting macroeconomic crisis of 2008 was due to financial excess, and therefore macroeconomic fundamentals have not changed, either before the crisis, or since. financial excesses in the bubble years accumulate on the balance sheets of those who leverage heavily, and the prevalence of such problems may become a drag on economic recovery for some time, but eventually time will heal the wounds and everything will be back to normal. in other words, the issue at stake is maintaining financial stability, and all that is required of economic theory and policy is to supplement their theoretical and policy toolkits by adding measures to check financial excess before it builds up and to control systemic damage when bubbles burst. lord keynes, who laid the foundations of macro theory and policy three - quarters of a century ago would most certainly have challenged such a view, if he were attending this conference. in fact, just one year after the publication of the general theory, in a speech whose theme still resonates today, he has alluded to the issue at the root of my uneasiness1. so let me stand on his shoulders and explain. there is a remarkable correlation between asset market bubbles that cause macroeconomic crisis and demographical changes. in figures 1. 1 and 1. 2, i