of an actual deflation in the sense of a broad - based decline in prices. but the big problem at the moment is a prolonged period of low nominal growth, so low inflation and low growth. this creates debt sustainability problems – both for private households and governments. furthermore, increasing real interest rates have negative effects on the economic recovery. but the new ecb projections for growth and inflation have been revised only marginally. why did the governing council nevertheless decide to take quite far - reaching decisions? these are not the governing council ’ s projections – this is very important. these are the ecb ’ s staff projections and in that sense they are just one element for the governing council ’ s decision. the risks to the downside for growth and inflation were seen as more important by the governing council. so it would be fair to say it was some kind of insurance policy against the downside risks? when we deal with risk management we always have to be as preemptive as possible. this is particularly the case if there is a risk to inflation expectations. we simply had to do more right now. with the recent decisions the governing council explicitly aims at a significant increase in the ecb ’ s balance sheet. this is a major shift in the ecb ’ s policy, bringing it even closer to other central banks. with the recent interest rate cut we are now at the zero lower bound. so if we believe that we need an even more expansionary monetary policy, we have to find different channels. an increase in the balance sheet is one option. on the one hand, it influences the inflation expectations for the future, and on the other hand, it triggers shifts in investors ’ decisions. this will spill over to other asset markets and also have an impact on the exchange rate. bis central bankers ’ speeches according to many observers the effects could be even bigger if the ecb would give a precise figure for the two purchases programs of asset backed securities ( abs ) and covered bonds. i understand the argument. but from our perspective it is difficult and it would not be appropriate to commit to a certain number. we have decided not to do so. so even when we get more details at the beginning of october we will not get a precise figure for the planned purchases? at the moment we are not intending to give a concrete number. but draghi has signaled that – including the new tltros – the aim is to increase the balance sheet by €750 billion to €1 trillion.

the more important. as japan seeks to rebuild its economy, efforts to raise the potential growth rate have become even more important. these are certainly not easy challenges, but we have to take them on with great determination. v. the bank of japan ’ s response finally, let me briefly touch on the bank of japan ’ s response after the earthquake struck. as was the case in the financial markets immediately after the failure of lehman brothers, when people ’ s lives and safety are at risk, they sometimes tend to become excessively risk averse, which makes things worse. incidentally, while foreign nationals residing in tokyo increasingly left japan for fear of radiation risk, it has tended to be overlooked that the radiation levels in tokyo are roughly the same as in other major cities around the world, such as paris and berlin, or they were exposed to more radiation on the airplane than they would have been exposed to in tokyo. in the money markets, financial institutions ’ precautionary demand for liquidity surged. rumors have spread among the foreign financial community that the tokyo financial markets would close due to fears of radiation risk. the bank of japan has been asked whether there was any truth to the rumors that the bank of japan was planning to retreat to a backup site in the western part of japan. of course, these rumors were and are groundless. as i said, the financial infrastructures are fully functional and there is no reason for us to relocate from tokyo. bis central bankers ’ speeches in such times, the first priority is ensuring calm among market participants, and in this regard the bank of japan has provided ample liquidity on an unprecedented scale day after day. the very next business day after the earthquake, we decided to significantly increase the amount of its asset purchases, mainly of risk assets, with a view to preventing any deterioration in business sentiment or excessive increase in risk aversion from adversely affecting economic activity. as a result of these measures, financial markets, which became somewhat jittery in the period immediately after the earthquake occurred, have regained stability. needless to say, the bank of japan ’ s mission is to ensure price and financial system stability, thereby contributing to the sustainable growth of japan ’ s economy. we will continue to take appropriate measures as the central bank in order to achieve this mission. vi. concluding remarks as i mentioned earlier, nothing is more heartening in a crisis than the encouragement and support of friends overseas. i would like to conclude by thanking you once again for