the problem. in those days, we made the most of academic wisdom, but we often encountered the situations that were not well captured by the existing economic theory. for example, financial imbalances were built up under benign economic conditions, through sharp credit expansion, outsized leverage, and soaring asset prices. 2 after the burst of the bubble, market participants suddenly lost their confidence and reduced their risk - taking capacity. as a result, japan ’ s 1990s is often referred to as the “ lost decade. ” for the appropriateness of such characterization and policy responses, see shirakawa ( 2009a ). among the papers contributed to the conference, hattori, shin, and takahashi ( 2009 ) revisit japan ’ s bubble in the 1980s by shedding light on the changes in money flow behind the expansion of the bubble. the effectiveness of monetary policy was severely constrained. further monetary policy responses with unorthodox measures were adopted. the effectiveness of monetary policy measures crucially depends on the central bank ’ s credibility, which is partly affected by the soundness of central bank balance - sheet and central bank ’ s neutrality perceived by the public at large. all in all, those experiences seem to show that textbooks on macro and monetary economics need some new chapters on the interaction between the financial system and monetary policy. the way of thinking about monetary policy management has certainly changed since the outbreak of global financial market turmoil in the summer of 2007. in particular, since the collapse of lehman brothers in september last year, the policy discussions have changed further with the first - hand experiences of the downward spiral in both the financial and real sectors of the economy. it has turned out that japan ’ s experience is no longer unique. adoption of unprecedented policy measures : japan ’ s experiences i will provide a basis for discussion by reviewing the bank of japan ’ s policy implementation during the financial crisis after the burst of the bubble, especially since the late 1990s. of course, various measures were taken in the fields of central banking. here my focus is on monetary policy. the bank of japan ’ s policy responses can be summarized into five points. first, the bank lowered overnight interest rates in the interbank market down to virtually zero, eventually just one - tenth basis points ( 0. 001 percent ). second, the bank provided ample excess reserves by using various tools for monetary operations, including an increase in the outright purchase of long - term government bonds. for the smooth provision of ample liquidity, the maturity of monetary

for release on delivery 8 : 45 a. m. edt june 17, 2022 welcoming remarks remarks by jerome h. powell chair board of governors of the federal reserve system at “ international roles of the u. s. dollar, ” a research conference sponsored by the federal reserve board washington, dc june 17, 2022 good morning, and welcome to the inaugural conference on the international roles of the u. s. dollar. thank you all for participating and for lending your expertise on this important topic. this conference marks the first use of our new martin conference center, which i hope you enjoy. the international financial and monetary system that emerged after world war ii has been defined by the centrality of the dollar. it is the world ’ s reserve currency and the most widely used for payments and investments. as outlined in recent work by board staff, this global preeminence has been supported by the depth and liquidity of u. s. financial markets, the size and strength of the u. s. economy, its stability and openness to trade and capital flows, and international trust in u. s. institutions and the rule of law. 1 professor barry eichengreen will expand on some of these themes later this morning. the dollar ’ s international role holds multiple benefits. for the united states, it lowers transaction fees and borrowing costs for u. s. households, businesses, and the government. its ubiquity helps contain uncertainty and, relatedly, the cost of hedging for domestic households and businesses. for foreign economies, the wide use of the dollar allows borrowers to have access to a broad pool of lenders and investors, which reduces their funding and transaction costs. the benefits of the dollar as the dominant reserve currency have generated an extensive academic literature. yesterday ’ s paper on the treasury market by alexandra tabova and frank warnock extends that work in meaningful ways. see carol bertaut, bastian von beschwitz, and stephanie curcuru ( 2021 ), “ the international role of the u. s. dollar, ” feds note ( washington : board of governors of the federal reserve system, october 6 ), https : / / doi. org / 10. 17016 / 2380 - 7172. 2998. - 2the federal reserve ’ s strong commitment to our price stability mandate contributes to the widespread confidence in the dollar as a store of value. to that end, my colleagues and i are acutely focused