november 4, 2020 bank of japan japan's economy and monetary policy speech at a meeting with business leaders in nagoya ( via webcast ) kuroda haruhiko governor of the bank of japan ( english translation based on the japanese original ) introduction it is my great pleasure to have the opportunity today to exchange views with a distinguished gathering of business leaders in the chubu region. i would like to take this chance to express my sincerest gratitude for your cooperation with activities of the bank of japan's nagoya branch. the biggest issue since the last time we met one year ago is the novel coronavirus ( covid - 19 ) pandemic, which has been widely affecting economic and financial activities, as well as social life. actually, given the impact of covid - 19, it has been decided that this year's meeting will be held online. today, while outlining the outlook for economic activity and prices ( outlook report ) released last week, i would like to explain the bank's view on japan's economic activity and prices, which have been affected by covid - 19, and its thinking behind the recent conduct of monetary policy. i. developments in economic activity and prices let me start by talking about economic developments. japan's economy has picked up with economic activity resuming, although it has remained in a severe situation due to the impact of covid - 19. unlike around spring, when economic activity was constrained, japan is now taking targeted preventive measures and improving economic activity simultaneously. in this situation, it is becoming evident that the economy has bottomed out in the april - may period. on the other hand, it has been reconfirmed that there is less of a likelihood that the economy will improve steadily and smoothly, as seen in a pause in the pick - up in services consumption around summer, when the number of confirmed new cases of covid - 19 increased. next, i will briefly explain developments in respective demand components behind the outlook for japan's economy. first is developments in overseas economies and external demand. overseas economies have picked up from a state of significant depression. the gdp growth rates for the april - june quarter registered the largest - ever negative figures in many countries. thereafter, those for the july - september quarter seem to have turned positive, mainly due to a resumption of economic activities and the materialization of pent - up demand. overseas economies are likely to continue improving, but the pace is expected to be only moderate

supplying operations ; and ( 3 ) active purchases of exchange - traded funds ( etfs ) and japan real estate investment trusts ( j - reits ). these responses have had positive effects, coupled with the government's measures and efforts by financial institutions. global financial markets are still nervous, but tension has eased. although firms'financial positions have been weak, the environment for external funding, such as the issuance of cp and corporate bonds as well as bank borrowing, has remained accommodative. in response to the covid - 19 shock, the bank has conducted monetary policy with a view to supporting corporate financing and maintaining stability in financial markets. let me explain in some detail why we consider these two points as crucial. the first is with regard to supporting corporate financing. there is a dilemma that the demand stimulus measures for the overall economy could constrain economic activity if they lead to an increase in the number of confirmed cases of covid - 19. given that the spread of covid - 19 continues, demand stimulus measures for targeted areas are effective, since prevention of infection and improvement in economic activity can be achieved simultaneously. in this situation, it is important to prevent firms and sole proprietors affected by covid - 19 from facing difficulties in financing and to provide an environment where they can quickly restart their businesses as covid - 19 subsides. taking into account these points, governments and central banks around the world have focused on protecting businesses and employment in response to the current crisis. the bank has supported corporate financing through the special program with a total size amounting to about 130 trillion yen. the second point regards maintaining stability in financial markets. the economy will fall into a vicious cycle should the following happen : if uncertainties increase over future developments in the economy, financial markets are more likely to become unstable, and turmoil in the markets may negatively affect the real economy through deterioration in firms'and households'sentiment. with a view to preventing this vicious cycle, measures to maintain stability in financial markets are important at the time of a crisis. thus, in the current crisis, the government and central bank of each country have swiftly made policy responses on a large scale, also based on the lessons learned at the time of the gfc. so far, i have explained that the bank has conducted powerful monetary easing with a view to supporting corporate financing and maintaining stability in financial markets, thereby encouraging economic and financial activities. maintaining accommodative financial conditions during the severe economic situation will