been slowing gradually. on the other hand, consumer prices continue to decline at a moderate pace. with regard to the outlook, the slower growth in imports of consumer goods is expected to alleviate the downward pressure on prices to some extent. however, as i mentioned earlier, momentum for a recovery in domestic private demand is expected to be weak, and factors such as technological innovation, deregulation, and streamlining of distribution channels will continue to restrain prices. given the situation, prices as a whole are expected to follow a moderate downtrend for the time being. ii. financial developments financial markets were unstable toward the end of march 2002, reflecting market participants'nervousness due to growing concern about the stability of the financial system in the period immediately before the removal of blanket deposit insurance. regarding corporate financing, the lending attitude of private banks became more cautious, and the financing conditions of firms with high credit risks, especially small firms, gradually became more severe. governor hayami made a statement regarding the semiannual report on currency and monetary control for the second half of fiscal 2001 before the committee on financial affairs, house of councillors, on july 4, 2002. financial markets have gradually regained stability on the whole since april 2002, as the economy improved slightly. in the corporate bonds and cp markets, the issuing environment has been improving recently. this suggests that investors'stance toward taking credit risk is starting to improve. financing conditions of firms with relatively high credit risks, however, remain severe. hence, developments in the behavior of financial institutions and corporate financing continue to require close monitoring. japanese stock prices have been somewhat weak since mid - june 2002, reflecting the fall in u. s. stock prices. the yen has become stronger against the u. s. dollar. if these developments go so far as to cause financial markets to become significantly unstable, japan's economy, which is on an improving trend, will be negatively affected. thus, developments in financial markets also require close monitoring. iii. recent conduct of monetary policy the bank adopted a new framework for money market operations at the monetary policy meeting in march 2001. the main operating target was the " quantity " of liquidity, i. e., the amount of the outstanding balance of current accounts at the bank as the uncollateralized overnight call rate had declined to low levels close to zero percent and there was hardly any room left for further easing using orthodox monetary policy measures. under the new framework, the bank has been conducting drastic monetary easing,

denis beau : the euro area sovereign debt markets in the crisis role and impact on financial stability perspectives speech by mr denis beau, first deputy governor of the bank of france, at the risk live 2021, 7 june 2021. * * * the demand and supply environment in which european sovereign debt markets operate has changed over the last years and is still changing : 1. firstly, liquidity in the financial system has increased, both in terms of excess reserves held by commercial banks and deposits held by the non - financial sector, notably corporates, whose considerable increase in gross debt has so far largely been offset by a similar rise of liquid assets on aggregate ; 2. secondly, central banks have strengthened their presence in the secondary sovereign debt market. this is a common and global feature. the eurosystem for instance, has reinforced its accommodative policy stance notably by stepping up its asset purchases of public sector securities under the pandemic emergency purchase programme ( pepp ) while continuing those under the asset purchase programme ( app ). this implies that a large proportion of the stock of some governments ’ debt - for the major currencies - is currently held by central banks ; 3. a third obvious factor lies in the significant increase in sovereign debt issuances since last year, as european countries implemented substantial fiscal measures to cushion the economic impact of the covid crisis and foster a subsequent recovery. all in all, euro area governments issued close to eur 1 trillion in net debt in 2020. it is also worth noting that common debt issued under the sure programme ( support to mitigate unemployment risks in an emergency ) and even more so the recovery fund will make the european union one of the largest debt issuers in europe relative to national sovereign debt issuers over the coming years. these changes do not seem to have altered the good functioning of the euro zone sovereign market. on the contrary faced with the economic and financial shocks triggered by the corona virus pandemic, they have fared well and proved resilient. they have consequently strongly helped, with the banking system, governments and the eurosystem to implement forceful policies that have proved effective to help the private sector to absorb those shocks. in my initial remarks today i would like to highlight some dimensions of this resilience, looking in turns to bond and the repo market but also highlight a few vulnerabilities and point of attention from a financial stability standpoint that the role and functioning of eurozone sovereign markets during the crisis has