%, virtually a zero interest rate, in the secondary market. the financing environment has been more or less favorable for firms. credit spread, which is the difference between yields on cp and corporate bonds issued by major private firms and those on government bonds, generally widened from last autumn centering on firms with a lower credit rating but has recently started to gradually narrow. although a severe financing environment continues for small and mediumsized firms, it would seem that such deterioration is nearing an end. one noted development of late is the high growth of monetary base which shows the amount of money directly provided by the bank. year - on - year growth of monetary base exceeded 10 % from september 2001 and has been around 30 % since entering 2002. such recent high growth matches that during the runaway inflation period immediately after the first oil shock. overall, financial conditions in japan have been extremely easy. but the growth rate of the economy and various price indexes has been negative. in other words, despite an extremely accommodative financial environment, real economic activity has not been rejuvenated. various structural adjustment pressures lie in the background, which can be summarized from the viewpoint of firms, the financial system, and households as follows. first, on the part of firms, they cannot activate business activity such as capital investment no matter how easy monetary conditions are since the problems of excess debt and industrial structure are yet to be solved. second, forces to lift the economy from the financial side are not likely to emerge since the intermediary function of financial institutions has been eroded against the backdrop of the npl problem. third, households are cautious to increase spending even under easy monetary conditions because of uncertainties with respect to the future course of the public pension and social security system. for the bank ’ s monetary easing to exert powerful effects, it will be necessary to solve such problems. once fund demand related to economic expansion emerges, effects of current monetary easing will materialize before our very eyes. based on such a view, i have been repeatedly emphasizing the importance of strengthening the financial system and promoting structural reform of the economy. the bank conducted research through its branch network to discover new approaches taken by firms in the various regions. according to this research, in the wake of deregulation and proactive efforts by firms, nationwide we are seeing an increase in new entries to new business areas including the environment, nursing care, and health care. for specific examples, please refer to the report i recently made to the

agus d w martowardojo : maintaining financial stability amid continued economic growth deceleration keynote speech by mr agus d w martowardojo, governor of bank indonesia, at the discussion and launching of the financial stability review book, jakarta, 10 december 2015. * * * honorable, our predecessors governors of bank indonesia, members of the board of governors of bank indonesia, officials in the ministries and state agencies, banking leaders representatives of industry associations academicians and economic observers attendees and invitees, assalamu ’ alaikum warahmatullahi wabarakatuh, good afternoon and best wishes to us all, first of all, let us pray our praise and gratitude to allah swt, the god almighty for only upon his grace and blessing, we can all gather here in good health to participate in the discussion and launching of the book on financial stability review ( kajian stabilitas keuangan - ksk ) no. 25, september edition year 2015. the development of this ksk constitutes a part of the transparency and accountability of bank indonesia ’ s duty implementation in the field of macro - prudential. as one of the routine semester publications, ksk contains the results of assessment and review of bank indonesia toward the condition of the national financial system. such assessment also covers our monitoring to the sources of vulnerability and imbalance of the financial system that can be found in the financial markets ; financial agencies / institutions, namely households and corporates ; banking ; and non - bank financial institutions ( institusi keuangan non - bank - iknb ) ; and also financial infrastructures. due to the deceleration of economic growth experienced by indonesia, it is critical for bank indonesia as the authority in the field of macro - prudential to continue maintaining the stability of financial system. especially, as the dynamics of the global financial system continue to remain under uncertainties. therefore, the edition of ksk this time takes up the theme of “ maintaining financial stability amid continued economic growth deceleration ” we are convinced that our duty in maintaining the stability of economy will be more challenging. hence, we expect that depth assessment and review on the condition of national financial system will be a valuable reference for us in taking measures in the future. ladies and gentlemen, the condition of indonesia ’ s financial system in 2015 in general is still overwhelmed by various challenges and fluctuations, both sourced from global and domestic. the still weak global economic recovery, the continued declining price of