##eap determined that abf1 had achieved its original purpose, its proceeds were reinvested in abf2. in july 2018, some selected bonds held within abf2 were made available for lending to support the development of local currency securities lending markets and to enhance the functioning of regional money markets. from a market perspective. activities by those market participants and relevant authorities have been indispensable for the development of asia's capital markets. i would like to recognize and praise all of those who have committed to these efforts. looking to the future, asia needs to further accelerate and deepen the development of its financial markets more than ever before. this is because the existence of more developed capital markets both domestically and regionally will play a much more crucial role for the long - term stable economic growth of the region. today, i would like to discuss the economic implications of the conference theme, " developing asia's capital markets, " from several perspectives. then, i will briefly touch on interest rate benchmark reform, as a specific example of the challenges we are facing as we endeavor to further develop market infrastructures. economic significance of further developments in asia's capital markets financing economic growth through the growing middle - income class let me begin with the importance of relying on the growing middle - income class to finance economic growth. the middle - income class in asia has been growing to a remarkable extent. the organisation for economic co - operation and development ( oecd ) forecasts4 that the middle - income population in asia will constitute 66 percent of the world's share in 2030, more than doubling that in 2009 ( chart 2 ). the rise of asia's middle - income class will be accompanied by growth and diversification of the financial needs of that class. both domestic and regional markets in asia must satisfy those evolving demands by providing various financial services, including investment trusts, pension funds, and insurance. by doing so, asia will receive benefits such as inflows of money from the middle - income class into infrastructure projects, which require a significant amount of funding. in other kharas, h. ( 2010 ), " the emerging middle class in developing countries, " oecd development centre working paper, no. 285. words, meeting the financial demands of the growing middle - income class will contribute to utilization of asian savings for asian investments. strengthening financial stability with more liquid domestic capital markets now, i would like to proceed to a perspective of financial stability.

march 28, 2017 bank of japan lessons of japan : focusing on issues regarding long - term inflation expectations speech at yale university in new haven takehiro sato member of the policy board introduction first of all, i thank senior fellow stephen roach for giving me the opportunity to talk to this esteemed audience at yale. i understand that he teaches macroeconomic policy issues, focusing on the lessons japan learned from deflation. the bank of japan is the frontrunner in combating deflation. as one of its board members, i hope that my remarks today will help stimulate academic discussion. deflation has prevailed for almost a quarter century in japan. to overcome deflation, theory and practice were introduced and tested, and the policy effects were examined. as a result, a range of knowledge and wisdom has been acquired. the bank, on its part, conducted a comprehensive assessment of quantitative and qualitative monetary easing - - or qqe for short - - in september last year, and learned some important lessons. among these, i will today focus on the issues regarding long - term inflation expectations. this is because they are the key factor in overcoming deflation. i admit that conceiving such expectations is a somewhat elusive task, but it is worth discussing. i. lessons of japan a. determinants of long - term inflation expectations japan's experience refutes the premise for monetary policy that long - term inflation expectations are determined by a central bank ( chart 1 ). 1 this is because monetary policy effects are asymmetric when a central bank decreases long - term inflation expectations toward the target and when it raises them toward the target. in other words, once long - term inflation expectations - - the norm of prices - - are de - anchored, a central bank's ability to influence inflation is constrained significantly due to the zero interest rate bound. those in academia might feel that this is somewhat troublesome. in fact, however, when a central bank re - anchors long - term inflation in its statement on longer - run goals and monetary policy strategy ( adopted effective january 24, 2012 ; as amended effective january 26, 2016 ), the federal reserve indicated that " the inflation rate over the longer run is primarily determined by monetary policy, and hence the committee has the ability to specify a longer - run goal for inflation. " see board of governors of the federal reserve system ( 2016 ). expectations toward the target, there will be a limit if monetary policy is the only game in town. what