of december 2013. in addition, the bank decided at the monetary policy meeting held on january 21 and 22, 2013 to introduce, after completing the current purchasing method, a method of purchasing a given amount of financial assets every month without setting any termination date. specifically, from january 2014, the bank will conduct purchases of financial assets totaling about 13 trillion yen each month for some time. as a result, the amount outstanding of the asset purchase program will be increased further by about 10 trillion yen in 2014 – to about 111 trillion yen – and is expected to be maintained thereafter. c. strengthening policy coordination between the government and the bank on january 22, 2013, the bank released “ joint statement of the government and the bank of japan on overcoming deflation and achieving sustainable economic growth ”. the bank announced that it was setting the “ price stability target ” at 2 percent in terms of the year - onyear rate of change in the cpi, and that, under this target, it would pursue monetary easing and aim to achieve this target at the earliest possible time. the bank stated that it would ascertain whether there was any significant risk to the sustainability of economic growth, including from the accumulation of financial imbalances. the government, on the other hand, announced that it would formulate and strongly promote measures for strengthening the competitiveness and growth potential of japan ’ s economy, and steadily promote measures aimed at establishing a sustainable fiscal structure with a view to ensuring the credibility of fiscal management. the government plays a crucial part in strengthening the growth potential of the economy. specifically, strengthening the growth potential hinges on the cumulative efforts of firms and financial institutions to create and expand new business. in this context, the government plays a pivotal role in fostering, through regulatory and institutional reforms, an environment that encourages the private sector to take on new challenges. while the bank continues to pursue aggressive monetary easing through measures such as large - scale purchases of jgss, japan ’ s fiscal imbalances – among the most serious in the world – could hamper the effects of monetary easing. if the credibility of japan ’ s fiscal management were to falter, interest rates would likely rise, thereby making fiscal management more difficult and undermining the effects of monetary easing. in order to fully ensure the effectiveness of monetary easing, it is important for the government to ensure market credibility of fiscal consolidation. in this regard, the joint statement has profound significance in showing that the government and the bank have clearly acknowledged each other ’

in peripheral countries among the fiscal situation, the financial system, and economic activity, business and household sentiment has become cautious. because fiscal austerity measures will continue, economic activity is expected to continue receding slowly for the time being. however, while tensions in financial markets have been easing, business sentiment has shown signs of improvement in core countries such as germany. regarding the outlook, as economies outside the euro area pick up, economic activity in the euro area – particularly in the core countries – is likely to gradually emerge from the deceleration phase, led by exports. bis central bankers ’ speeches 4. u. s. economy the u. s. economy continued to recover at a moderate pace, particularly in the household sector, supported by accommodative financial conditions. although some weakness can be seen in household sentiment due to the effects of the expiration of the payroll tax cut at the beginning of 2013, the employment situation has been improving, albeit modestly, and private consumption has been firm, as evidenced by continued brisk car sales. housingrelated investment has also continued to show signs of picking up, albeit at a depressed level. because the fiscal cliff was avoided, reducing the risk of a sharp fiscal tightening, business sentiment has been improving, and consequently, the deceleration in business fixed investment is coming to a halt. the u. s. economy is likely to continue recovering, supported by accommodative financial conditions. nevertheless, the pace of recovery is likely to remain only moderate for the time being, reflecting the lack of momentum in external demand as well as continued downward pressure from the fiscal side. 5. china ’ s economy, and the nies and the asean economies with regard to emerging countries, the chinese economy has been regaining stability on the back of firm domestic demand. domestic demand as a whole has been firm, as evidenced by the uptrend in infrastructure investment and retail sales. there are also signs of a bottoming out in exports and imports. reflecting these developments in demand at home and abroad, industrial production has also been stabilizing. as for the outlook, domestic demand is expected to remain firm, partly due to the effects of policies taken since mid - 2012 such as monetary easing and the front - loading of public works projects. under these circumstances, as inventory adjustments make progress and exports gradually pick up, the recovery of the chinese economy is likely to become more pronounced. however, since china ’ s new administration has launched a policy emphasizing “