haruhiko kuroda : overcoming deflation – theory and practice speech by mr haruhiko kuroda, governor of the bank of japan, at keio university, tokyo, 20 june 2016. * * * introduction it is a great honor to have the opportunity to speak to you today at the faculty of economics at keio university. founded by yukichi fukuzawa in 1858, keio gijuku has a history spanning more than 150 years. the faculty of economics – the precursor of which, together with the faculty of letters and the faculty of law, was one of the three original faculties of keio university established in 1890 – is said to be the oldest economics faculty in japan. since then, it has not only been a leading force in economic scholarship in japan in a wide range of research areas but has also turned out a large number of individuals that have gone on to play prominent roles in the world of politics, business, and finance. since i have been given the opportunity to speak at such an academic venue, today i would like to talk about the implementation of so - called unconventional monetary policy and their link to developments in academic research, based on the bank ’ s experience in implementing quantitative and qualitative monetary easing ( qqe ). i. qqe with a negative interest rate japan has struggled with deflation since the late 1990s, and in the process the need for more powerful monetary easing gradually became evident. the abe administration was inaugurated in december 2012 and launched its so - called “ abenomics ” policies consisting of “ three arrows, ” and i assumed my role as governor of the bank of japan in march 2013. in april, at the first monetary policy meeting after i became governor, the bank decided to introduce qqe. qqe comprises two elements designed to break through the bounds to previous monetary policy measures ( chart 1 ). the first element consists of trying to drastically convert the deflationary mindset that had gained hold among people and to raise inflation expectations through the bank ’ s strong commitment to achieving the price stability target of 2 percent at the earliest possible time. the second element consists of exerting downward pressure not only on short - term nominal interest rates but on the entire yield curve through massive purchases of japanese government bonds ( jgbs ). the consequence of these elements is that they make it possible to exert greater monetary easing effects on the real economy by substantially lowering real interest rates not only at the short end

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