toshihiko fukui : growth, integration and monetary policy in east asia opening speech by mr toshihiko fukui, governor of the bank of japan, at the 14th international conference hosted by the institute for monetary and economic studies, bank of japan, tokyo, 30 may 2007. * i. * * introduction good morning, ladies and gentlemen. it is my great honor to address the 14th international conference hosted by the institute for monetary and economic studies. on behalf of my colleagues at the bank of japan, i welcome all the distinguished guests from central banks, international organizations, and academia. the theme of this year ’ s conference is “ growth, integration and monetary policy in east asia. ” ii. east asia ’ s growing integration into the global economy over the past decades, east asia has been one of the most rapidly growing regions in the world economy. although the region suffered from a temporary setback owing to the financial crisis of the late 1990s, it has exhibited an impressive economic recovery. the average annual growth rate of east asian emerging economies since 2000 reached 7 percent, substantially exceeding that of industrialized economies. since the crisis, there has been a considerable improvement in economic fundamentals in the region. large stocks of foreign exchange reserves have accumulated, balance sheets of both the corporate and banking sectors have improved, and structural reforms in various areas have proceeded, all of which have contributed to making east asia more resilient to external shocks. it is highly likely that east asia will continue to play a major part in the sustained growth of the world economy. east asia ’ s high growth has been accompanied by its deepening economic integration with the world. the integration is taking place at both the inter - regional and intra - regional levels. it is reported that asia ’ s share of world trade more than doubled during the past three decades. intra - regional trade in east asia also increased considerably. the share of east asia ’ s intra - regional trade is comparable with the nafta, although it is slightly lower than that of the eu. the increasing trade is a reflection of developments in the supply chain wherein each country specializes in the optimal parts of the global production network based on its resource endowment and comparative advantages. meanwhile, it is notable that the rapid emergence of china is adding further momentum to the growth dynamism of the world economy in various ways. first, china ’ s buoyant domestic demand provides more business opportunities for the rest of the world. china ’ s role in the

actually taking a vote is an exception, not the rule. in recent months there has been very strong, unprecedented public criticism. i ’ m not at all concerned by the fact that there are differing views, that ’ s healthy and it ’ s normal because there are 25 of us. but what has been happening in recent months has not been very helpful. it hasn ’ t undermined the effectiveness of the september package of measures, because it went ahead as planned, but it ’ s much better to be united. we are a collegial institution and once we have reached an agreement, everyone should defend it. this is not to say, for example, that i 1 / 5 bis central bankers'speeches agreed with every element of the package. but once something has been approved, i defend it. is the consensus broken? no. this is actually one of the top priorities of the new president. each of us will have our own ideas about the situation and the appropriate measures to take, that ’ s one thing, but it ’ s something else entirely to air disagreements in public. you and mr draghi have met at various forums since 2011. how was the past year when you were working side by side? mario draghi will go down in history as one of the founding fathers of the euro, even though he isn ’ t one in the strictest sense. there were two stages to his presidency. the first was saving the euro, with his famous “ whatever it takes ”. the second was fighting deflation. these were his two main interventions, and he was successful in both. he will be remembered very positively. when he uttered those famous words in london in 2012, he changed the outlook in the euro area. the banking union was implemented right away. four or five years ago we were facing the risk of deflation and the asset purchase programme was launched, which brought the ecb in line with other central banks. mario draghi has modernised the instruments of monetary policy. despite this, his critics point to the fact that he has left behind a european economy that is “ drugged ”, with low growth, rates at zero and inflation very far from the objective. monetary policy is not the reason for this ; it ’ s been the main driver of the economic recovery and growth in europe. 11 million jobs have been created, in no small part thanks to monetary policy. this is the main thing, although there are collateral effects. the problem we have at the moment is that