related sector, is somewhat rising amid a fall in stock prices in the u. s. and worldwide as well as depreciation of the u. s. dollar. in these circumstances, it should be heeded that further destabilization in the foreign exchange and financial markets at home and abroad would easily exert a negative influence on the economy. on the price front, import prices are turning down due to the u. s. dollar ’ s depreciation against the yen since this spring. domestic wholesale prices are leveling off since a decline in machinery prices and a reduction in electricity charges are offset by the effects of the increase in import prices until recently and the completion of inventory adjustment. meanwhile, consumer prices stay on a gradual downtrend and corporate services prices continue to decline. as for the conditions surrounding price developments, the balance between supply and demand is expected to still keep exerting downward pressure on prices for a while amid persistently weak domestic demand, although the completion of inventory adjustment will support prices to some degree. moreover, factors such as the ongoing technological innovations in machinery, deregulation, and the streamlining of distribution channels will continue to restrain prices. with import prices beginning to turn down, the currently unchanged domestic wholesale prices is likely to edge down again as they are sensitive to import prices. consumer prices are expected to stay on a declining trend for the time being at the current gradual pace. this is because while the slower growth in imports of consumer goods is expected to alleviate the downward pressure on prices to some extent, the faster pace of decline in wages may possibly reinforce the ongoing decline in prices, especially for services prices. as for the financial market, in the short - term money markets, the outstanding balance of the current accounts at the bank of japan is recently moving around 15 trillion yen as the bank continues to provide ample liquidity to the money market. in these circumstances, the overnight call rate continues to move around zero percent. moreover, longer - term interest rates remain steady. yields on long - term government bonds inched down in response to a fall in stock prices and are mainly moving in the range of 1. 2 - 1. 3 percent recently. as for yield spreads between private bonds ( bank bonds and corporate bonds ) and government bonds, the downtrend from the start of this fiscal year has come to a halt since mid - june. stock prices fell through june in line with a decline in u. s. stock prices, but have edged up thereafter

in the interbank funding market for foreign currencies. the flexibility that central banks have to act when necessary, and to introduce measures as necessary, is a powerful framework in times of crisis. however, they are not permanent in nature and do not resolve the possible risks arising from global imbalances and volatile capital flows. the liquidity that central banks provide can be quite effective in alleviating the pain of the adjustment process, or temporarily stabilizing the situation in times of stress. the key is to use this temporary respite to initiate a positive cycle of fundamental reforms which will provide the foundation for strong, sustainable and balanced growth. i have presented what i believe to be three lessons from the global financial crisis. how could they be seen from both an asian and global perspective? first, putting one ’ s house in order does remain a key objective for all countries. sound macro - economic policies will continue to be of utmost importance. second, in putting one ’ s house in order, policy - makers need to be conscious of the cross - border spillover effects and the ensuing feedback effects on their own economies. such elements in their totality will need to be internalized within the decision - making process. such considerations will be important not only for macro - economic policy, but also macro - and micro - prudential policies. prudential rules to stabilize a financial system in one jurisdiction could push business across borders or influence global capital flows. furthermore, extra - territorial application of domestic rules, in spite of its good intentions, could have unintended negative consequences for the stability of financial systems of other countries. third, regional frameworks such as the chiang mai initiative can play a vital role in maintaining financial stability in the region. it reflects the unique characteristics of the region and provides strong incentives to countries in the region to work together. at the same time, it does not replace existing international financial arrangements, but rather supplements them. furthermore, the stability of the asian region naturally has global implications. thus, the regional surveillance provided by the asean + 3 macroeconomic research office, amro, together with the global surveillance provided by the imf will both play a pivotal role in the effective operation of the chiang mai initiative. thank you. bis central bankers ’ speeches