just as in corporate management, to carefully examine from a long - term perspective both the positive and negative effects of various policies, and select the optimum measures for japan ’ s economy. outright purchases of corporate financing instruments such as cp and corporate bonds to facilitate corporate financing should be regarded as exceptional measures for a central bank, for the following reasons. first, they involve directly shouldering a greater degree of individual private firms ’ credit risk and, consequently, a relatively high probability of incurring losses that will ultimately be borne by the taxpayer. and second, they carry the risk of damaging the financial health of the bank and ultimately undermining confidence in the currency and monetary policy. the bank nevertheless decided to introduce such exceptional measures, with the conditions that the measures be temporary until the market functions again, and that upper limits to total purchases be set. c. reduction of interest rates on term instruments : the most effective way to support the economy the bank ’ s policy rate is the uncollateralized overnight call rate. since the lehman shock, however, i have attached importance to the reduction of longer - term interest rates – that is, interest rates on term instruments. this is because corporate and household loans in many cases are based on these rates and, thus, i believe the most effective way to support the economy is to lower them. the bank introduced a new means of providing the money markets with ample longer - term funds with three - month maturity at a fixed rate of 0. 1 percent, which is equivalent to the policy rate – namely, a special funds - supplying operation to facilitate corporate financing, and a fixed - rate funds - supplying operation against pooled collateral. 9 interest rates on term instruments by nature are not suitable as target policy rates with specific figures 10 ; however, stabilizing such rates at low levels has been effective in pushing down the interest rate burden for the country ’ s economic activity. d. outright purchases of japanese government bonds ( jgbs ) : the risk of a rise in long - term interest rates warrants attention as an example of the policy measure to which possible negative side effects require careful attention, i would like to put forward the case of outright purchases of jgbs. the bank conducts its monetary policy through market operations – providing funds to, and / or absorbing them from, financial markets on a daily basis. at the same time, as part of its objective of supplying ample funds, the bank purchases 21. 6 trillion yen worth of jgb

when some banks adjusted their savings rates downwards although the mpc had decided to leave the krr on hold. at the july 2014 meeting, the mpc decided, by consensus, to keep the bis central bankers ’ speeches krr unchanged at 4. 65 per cent, with a majority of members agreeing that it was time to normalise interest rates, and giving forward guidance on the direction of the change in the krr in the first quarter of 2015. we renewed our efforts to restore the monetary transmission mechanism. we made some progress in our efforts to persuade the treasury to share sterilisation costs. we prevailed on the treasury to introduce three savings products targeting individual savers, two varieties of five - year and one three - year government of mauritius savings bonds to mop up some of the excess liquidity. a memorandum of understanding between the treasury and the bank is at an advanced stage of negotiation : it will provide the burden - sharing modalities, and may necessitate some enabling changes in the public debt management act 2008. improving customer experience in june 2014, we released the report of the task force on unfair terms in banking contracts, banking your future : towards a fair & inclusive banking sector. it makes 100 recommendations, including the abolition of 19 fees and the review of 13 others, and a free basic bank account for all mauritian citizens above 16 years old. these recommendations aim to improve the bank - customer relationship and help both banks and customers to achieve a fairer deal. the report is open for public consultation up to 31 october 2014. after the consultation period, the bank will analyse the report, along with the feedback and decide on an action plan. it is the first time in the history of the bank that a task force has been set up to look holistically into banking practices prevailing in the country, and the first time in the history of banking in mauritius that these practices have been examined so closely with inputs from all categories of stakeholders. it seems that the customer around whom banks should centre their business has been gradually left on the side over the years. the report seeks to provide a framework to bring the customer back at the heart of banking business. all stakeholders and the general public were invited to participate in this banking reform initiative by commenting on the proposed recommendations, making suggestions and proposals, so that together we can pave the way to a modern, efficient, and customer - centric banking sector. regional and international involvement we pursued our involvement in regional fora.