of the asset purchase program by adjusting the program in a flexible manner. h. is a substantial increase in risky asset purchases a viable option? on the other hand, it has been argued that the bank should substantially increase its purchase of risky assets. in line with its comprehensive monetary easing in october 2010, the bank has been purchasing risky assets such as corporate bonds and cp and – with government approval – exchange - traded funds ( etfs ) and japan real estate investment trusts ( j - reits ). among major central banks, the bank is the only central bank that purchases such risky assets for its own account. however, the bank ’ s intention in this operation is not to employ large - scale intervention in the asset markets but to work as a catalyst for the financial markets. some argue that it is a viable option for the bank to increase such purchases substantially by intervening in the markets on a large scale. i consider the efficacy of this sort of policy initiative to be doubtful, as it contains the risk of eroding the bank ’ s capital base. if the prices of risky assets held by the bank declined and the bank incurred a loss, this would result in a reduction in its payments to the national treasury. if the size of the risky assets was sufficiently large compared with the size of the bank ’ s net capital, the bank might fall into capital deficiency. the first outcome, reduction of payments to the national treasury, would be equivalent to an increase in fiscal spending, and because of this risk the bank must obtain authorization from the government based on article 43 of the bank of japan act in order to purchase etfs and j - reits. the second outcome, capital deficiency, could lead to a larger issue, affecting the credibility of the bank and the bis central bankers ’ speeches yen as well as the autonomy of monetary policy, if the bank asked the government for recapitalization or compensation for its loss. given these issues, whether the bank should substantially increase risky asset purchase from the current limit is a matter that involves not only the bank but also the government. it might therefore be effective to set ex ante policy rules for loss sharing, in order to prevent purchases of risky assets from influencing the autonomy of the bank ’ s monetary policy. i. are foreign bond purchases a viable option? at a press conference in july 2012 after becoming a policy board member, i remarked that foreign bond purchases might be an option for the bank but a number of conditions must be met. for example,

areas. lower interest rates may provide short - term support. but they are no substitute for structural policy measures. to return to higher growth rates, innovations and digitalisation will be important factors. they provide opportunities for our two countries to increase efficiency and develop new business models. as a central bank, we are committed to ensuring price stability. this is our best contribution to favourable economic conditions that in turn can be conducive to the free flow of goods, services and ideas. indeed, price stability plays a key role. it is important because it preserves the currency's purchasing power, reduces economic uncertainty and creates a stable environment for investment and trade. price stability also makes an important contribution to political stability. as a contrast, global fragmentation increases the likelihood of future price pressures. if such pressures result in high inflation, this is a heavy burden, especially on low - and middle - income households. and it can lead to political instability – not least by influencing voter preferences. 3 aim for resilience far - sighted policies aim at resilience. during the pandemic, businesses and organisations have learned to become more flexible and resilient. they have adjusted their business models to better respond to unpredictable events, without abandoning their international focus. thus, as seen in the covid example, resilience means a combination of strengthening our economies and preserving openness and international interconnectedness. and preserving a " level - playing field " in global trade where possible. let us continue to build on this foundation together. 4 conclusion ladies and gentlemen, i firmly believe that we have much to learn from each other and can greatly benefit from mutual exchange. at the same time our corporates are not only business partners but in part also competitors. that being said, we have to find a way to ensure competition is fair and beneficial for both sides. by combining our strengths we can create a sustainable and successful future together. our task in the context of constantly changing global conditions is to address challenges – together! – and to identify potential and opportunities for a sustainable and resilient future. 3 / 4 bis - central bankers'speeches to this end, the common dialogue – like our's today – is invaluable! 1 the people's republic of china is again germany's main trading partner - german federal statistical office ( destatis. de ) 2 bundesbank monatsbericht januar 2024. 4 / 4 bis - central bankers'speeches