are various forecasts as to when the accommodative monetary policy will be changed and projections for the future level of interest rates consequently vary. however, with the recently announced framework in place, it is expected that stable projections about future interest rates will be formed in the markets and long - term interest rates will be stabilized. in this way, the policy duration effect could exert significant easing effects, especially when economic recovery progresses and corporate profits improve. the third channel is that the recent monetary easing measures, through their effect on business and household sentiment, will underpin the economy. the recent measures are likely to have been effective in stabilizing the sentiment of firms and households, which have been worried about the adverse effects of the slowdown in overseas economies and the appreciation of the yen. the bank has been stating for quite a while that it “ will carefully examine the outlook for economic activity and prices, and, if judged necessary, take policy actions in a timely and appropriate manner. ” i believe that public confidence in the central bank ’ s conduct of monetary policy, by alleviating anxiety about a possible economic downturn, will boost the momentum for a self - sustaining recovery in japan ’ s economy. in addition to the comprehensive easing i have just explained, in june 2010 the bank introduced a new program through which it provides long - term funds at a low interest rate to private financial institutions in accordance with their efforts in terms of lending and investment to strengthen the foundations for economic growth. the reasoning underlying this measure is the bank ’ s view that the decline in the growth trend of the economy has brought about sluggishness in business fixed investment and private consumption through a decline in firms ’ and households ’ growth expectations, which in turn is the fundamental cause of the current deflation. related to this point is that when we look at japanese firms ’ funding conditions, overall, they have abundant on - hand liquidity. at the same time, deposits at financial institutions far exceed loans and financial institutions use those surplus funds to invest in securities such as government bonds. this suggests that the biggest problem is not a shortage of cash or currency but limited investment opportunities resulting from the decline in growth expectations. the bank strongly hopes that these measures, by acting as a catalyst, will prompt discussions on this issue as well as efforts toward strengthening the foundations for economic growth. concluding remarks as i have just mentioned and as you experience on a daily basis, the biggest challenge facing japan ’ s economy is how to stop

over bids for ufj bank by two rival mega - banks. foreign capital has also played a meaningful role in this revitalization process. carving out new business opportunities such as m & a advisory, distressed debt transactions and private wealth management, foreign financial institutions are providing the japanese market place with good stimuli. against this backdrop, japanese banks and other financial services companies have begun to develop new business models, like providing a variety of non - conventional products and distribution channels that were unthinkable a decade ago, when the parochial turf war within the financial industry was all the more important. japan and asia with their non - performing asset problems receding, japanese financial institutions are shifting their strategic focus to profit enhancement, including reinforcing their business outreach overseas. this change is especially notable in asia where opportunities for new financial business are opening up saliently. a new economic dynamism is unfolding in the asian region. i refer to the vertical division of production processes whereby japan and the rest of asia are becoming increasingly inter - dependent through the trade linkages based on their comparative advantages. in contrast to such close trade linkages, financial linkage in this area is still weak. as is widely known, however, asia is abundant in both savings and investment opportunities. linking savings with investment is the key role of finance. if savings are channeled into investments within the region, that will increase the scope of finance, thereby enhancing efficiency of capital allocation. in this regard, sharing closer time zones is a huge advantage for financial institutions in asia. i hope that japanese financial institutions will take advantage of this strategic potential to cultivate a new business horizon. the successful marriage of savings and investments within asia will have global policy implications, too. the more efficient allocation of capital in asia, the greater demand for goods and services in savings - rich asia, and consequently the smaller imbalances in the global payment balances. let me remind you that development of asian economies has been made possible by its free access to the global market place, in particular us markets. this is evident not only by recent history of emerging economies but also by the history of japan hundred years ago. throughout history, not only consumers but also industries in the united states have benefited from growing trade and investment in asia. both the united states and asia have therefore a common interest in keeping our economies open to international flows of goods and capital. i hope this economic reality will continue to provide a basis for us involvement in asia, on which