march 15, 2019 bank of japan toward inclusive and sustainable development remarks at the b20 tokyo summit hosted by nippon keidanren ( japan business federation ) haruhiko kuroda governor of the bank of japan introduction it is a great honor for me to have the opportunity to give a speech at the b20 tokyo summit today. this year, with deputy prime minister and finance minister aso, i co - chair the g20 finance ministers and central bank governors meetings. we are discussing a wide range of issues at the g20, including those related to the sustainable development goals ( sdgs ). 1 to tackle global challenges such as the sdgs, it is essential for the private and public sectors to cooperate with each other. therefore, i find it very meaningful for business leaders from the g20 member countries to meet together and have discussions, in parallel with the g20 processes. this year the b20, under the theme of " realizing society 5. 0 for sdgs, " has been discussing innovations in various areas, changes in the business environment, and how to tackle global challenges. society 5. 0 has been proposed by the japanese government. it is defined as a human - centered society that balances economic advancement with the resolution of social problems by a system that highly integrates cyberspace and physical space. 2 in such a society, the current problems in various areas will be expected to be resolved by cooperation between the private and public sectors through new technologies and innovations. today, i will first talk about some recent developments toward achieving the sdgs, and then discuss how innovation could be used to pursue inclusive growth under which " no one is left behind, " mainly focusing on the financial aspects. i. recent trends toward sustainable development since the industrial revolution in the 18th century, global economic productivity has been boosted and people's living standards have been drastically enhanced. this rapid economic growth was supported by advancements in industrial technologies such as the internal combustion engine, and by the realization of a large - scale industrial society incorporating the sdgs are global development goals set by the united nations in 2015. they are made up of 17 goals and 169 targets to be achieved by 2030. the sdgs succeeded the " millennium development goals ( mdgs ), " established following the adoption of the united nations millennium declaration in 2000. for details on " society 5. 0 for sdgs, " see the website of cabinet office, government of japan. https : / / www8. cao. go.

following points. first, although the economy is no longer in deflation in the sense of a sustained decline in prices, the cpi has not reached the price stability target of 2 percent. second, people's mindset and behavior based on the assumption that prices will not increase easily have been deeply entrenched under prolonged deflation, and it will still take a long time for such mindset and behavior to change. in addition, the findings also confirm that monetary easing could have a cumulative negative impact on financial institutions'profits as well as on the investment income of life insurance companies and pension funds, which in turn could adversely affect the functioning of financial intermediation. as a policy response based on these findings of the comprehensive assessment, the bank introduced yield curve control in september 2016. through this framework, it controls policy interest rates to appropriate levels while taking into consideration both the positive and side effects of monetary easing. also, in july 2018, the bank, with a view to persistently continuing with powerful monetary easing, shifted to more flexible market operations and asset purchases so that long - term interest rates may move upward and downward to some extent and the amounts of its etf and j - reit purchases may increase or decrease depending on market conditions. the upcoming assessment of monetary easing measures is driven by the same motivations as the comprehensive assessment. the current framework of qqe with yield curve control has been working well for about four years since its introduction, including the covid - 19 era. the bank, under this framework, will assess whether operational practices and the policy tools, including various asset purchases, have had their intended effects. furthermore, because monetary easing inevitably will be prolonged due to the lingering impact of covid19, the bank is open to any options in pursuit of further effective and sustainable monetary easing. as the findings of the assessment are scheduled to be made public at the march mpm, i cannot draw any conclusions in advance. however, let me express my views on etf purchases. in japan, based on past experience, a destabilization of the stock market tends to bring about a deflationary mindset. given this unique factor, i think etf purchases have been effective in dispelling such mindset and will continue to be a necessary policy tool. that said, it is necessary to bear in mind that large - scale purchases and prolonged holding of assets - not limited to etfs - - could affect market functioning. while i will continue to consider