project, being developed by the 11 central banks of emeap economies, where emeap central banks will jointly invest in local currency denominated funds. as regards the third point, central banks in the region are now firmly focused on price stability and there is considerable progress in financial system reforms in each economy. these encouraging signals are, if anything, rather endogenous and market driven in their nature. yet, if we are to seriously explore the possibility of a single asian currency, strong political will is going to be essential at some stage. this is because, if the asian economies are to achieve convergence at a high level, rather painful reforms are indispensable. this is obvious if we look how difficult it is in europe to comply with the stability and growth pact. the introduction of a single currency by itself does not solve problems in each economy. neither does it yield economic growth. the full potential of a common currency can only be realized in so far as respective economies tackle structural problems in the process of achieving a monetary union. asian economies would experience significant dislocations if they were to form a monetary union without disciplined economic policies. in this context, we are paying attention to see if europe could succeed in advancing structural reform and achieve stronger growth by exploiting the heightened economic potential brought about by the introduction of the euro. before i finish, i would like to emphasize that asian integration would probably be soft - structured. each asian economy should endeavor to increase the attractiveness of their economy and currency for the time being. initially, this would mean additional flexibility. we can then share our experiences. at the same time, we should ensure that cultural diversities in the region would be translated into creative energy, and not clashes of culture. only then would we realize stable regional currencies, and the dream of a single currency would become a vision. thank you very much for your attention.

##ciation of the yen. domestic wholesale prices are declining somewhat mainly due to the decrease in prices of electrical machinery. consumer prices continue to be somewhat weak owing to the decline in prices of imported products and their substitutes. corporate service prices are falling slowly. as for the conditions surrounding price developments, the recent yen depreciation is exerting upward pressures on prices. however, given the pausing economy as well as the heightening excessiveness of inventories, albeit the latter is observed only for some goods, the balance between supply and demand in the domestic market is likely to exert downward pressures on prices. in addition, the declining trend of machinery prices caused by technological innovations, the decrease in prices of consumer goods arising from the streamlining of distribution channels, and the reduction in communications fees aided by deregulation will continue to restrain price developments. overall, prices are expected to be somewhat weak for the time being. moreover, given the high uncertainties this report is based on data and information available at the time of the bank of japan monetary policy meeting held on march 19, 2001. the bank ’ s view of recent economic and financial developments, determined by the policy board at the monetary policy meeting held on march 19 as the basis for monetary policy decisions. regarding future economic developments, possibilities that weak demand will intensify downward pressures on prices warrant careful monitoring. in the financial market, the overnight call rate generally moved around 0. 25 percent in february, and is moving around 0. 15 percent from march in response to the decision at the monetary policy meeting held on february 28 to change the guideline of money market operations. interest rates on term instruments are declining substantially due to the announcement of the improvements in the way of liquidity provision and monetary easing by the bank. the japan premium remains negligible. yields on long - term government bonds have declined to 1. 1 - 1. 2 percent due to the even more cautious view of market participants towards the economic outlook. the yield spreads between private bonds ( bank debentures and corporate bonds ) and government bonds are mostly unchanged or expanding somewhat. stock prices dropped substantially reflecting the decline in u. s. stock prices and the downward revision of the outlook on firms ’ profits. in the foreign exchange market, the yen depreciated again from the end of february. the yen is currently being traded in the range of 122 - 124 yen to the u. s. dollar. with regard to corporate finance, private banks continue to be more active in