of these banking organizations have relatively straightforward balance sheets that would benefit less from the basel ii risk - measurement and management requirements. in addition, in this country, our banks are subject to the requirements of prompt corrective action and minimum leverage and to statutory provisions that induce them to hold buffer capital far above the minimum requirements. more than 93 percent of the expected basel i banks hold capital that is in excess of 10 percent of their risk - weighted assets. moreover, in this country, requirements of the sort found in pillar 2 have been in existence for many years and are well ingrained into our supervisory process. the u. s. banking system also has a greater tradition of disclosure, as those of you with u. s. subsidiaries well know. thus, the cost - benefit analysis suggested that it would not be responsible to require most of our banks - entities that do not operate across national borders - to adopt basel ii, especially because thousands of them would probably choose the standardized version that adds only modest credit - risk sensitivity to risk - based capital requirements. smaller banks in many other countries, we believe, would benefit http : / / www. federalreserve. gov / boarddocs / speeches / 2003 / 200306102 / default. htm from adherence to pillars 2 and 3, and we hope they adopt basel ii, but our banks already operate under regimes fairly close to what the simpler versions of basel ii would provide. in light of their capital and supervision, we anticipate that u. s. banks with modest overseas activities operating under basel i rules would be able to continue their overseas operations without having to adopt basel ii. their subsidiaries, of course, would be subject to the rules and requirements of the host country. and, u. s. authorities will make available to host - country supervisors whatever information is required. u. s. branches of foreign banks would be basically unaffected by basel ii rules because they are not subject to direct capital requirements. and u. s. supervisors expect to find any variant of basel ii applied in foreign countries to be acceptable for our evaluations of well - capitalized standards at the consolidated parent level. however, u. s. subsidiaries would be subject to our rules for domestic banks and thus would have to choose either the a - irb and ama approaches or remain under the current basel i rules. we do understand that this could present some complications for foreign banks using approaches for their consolidated organizations that are not offered in the united states, such

october – december quarter of 2013. the purchasing managers ’ index ( pmi ) for manufacturing activity has recently shown some weakness, but the chinese economy is expected to basically maintain stable growth at around the current pace under state control. among other emerging and commodityexporting economies, economic developments in the nies are picking up, particularly in exports, as the effects of the economic recovery in advanced economies spread to them. in contrast, growth momentum in the asean countries has remained weak because of their relatively limited ability to profit from the recovery in advanced economies. in particular, there are concerns about the impact of unstable political situations in some of these countries on trade with japan, for example. among emerging and commodity - exporting economies, some of them – which have structural vulnerabilities such as current account deficits – saw nervousness in their markets at one point as the federal reserve proceeded to reduce the pace of its asset purchases, but the situation recently regained stability. b. japan ’ s economic activity and prices 1. current situation a. economic activity now, i will discuss japan ’ s economic activity. bis central bankers ’ speeches the bank ’ s current assessment is that japan ’ s economy has continued to recover moderately. moreover, a front - loaded increase in demand prior to the consumption tax hike has recently been observed. real gdp for the october – december quarter of 2013, released on february 17, 2014, showed quarter - on - quarter growth of 0. 3 percent, representing the fourth consecutive quarter of positive growth. by component, private demand for the quarter, including private consumption and business fixed investment, recorded a higher growth rate than in the july – september quarter. as for private consumption, consumption of goods such as durable goods increased partly reflecting the front - loaded increase in demand prior to the consumption tax hike amid the improvement in the employment and income situation evidenced by the increase in winter bonus payments. business fixed investment, which had previously been lacking momentum compared to firms ’ annual fixed investment plans and the improving trend of their profits, rose noticeably at last in the october – december quarter. in contrast, exports have lacked momentum to date despite the recovery trend in overseas economies, mainly advanced economies, and movements in the foreign exchange market. as imports grew substantially, net exports continued to significantly push down the gdp growth rate, as they had in the july – september quarter. although only a handful of economic indicators have been released for the period starting in january 2014, the seasonally adjusted number of new passenger -