supply shortages, firms will avoid making hasty decisions – such as raising prices of their products – that may result in losing customers, if firms judge the supply shortages to be temporary. on the other hand, if downside risks to the economy materialize, leading to a prolonged economic downturn, prices will be affected accordingly. other risk factors to prices include firms ’ and households ’ medium - to long - term inflation expectations, as well as developments in import prices, which are affected by fluctuations in international commodity prices and foreign exchange rates. iv. monetary policy a. the bank ’ s thinking behind the conduct of monetary policy so far, i have talked about economic activity and prices in japan. i would now like to turn to the bank ’ s conduct of monetary policy. the bank recognizes that japan ’ s economy is faced with the extremely important challenge of emerging from deflation and returning to a sustainable growth path with price stability. based on this recognition, the bank has been doing – and is determined to continue to do – its utmost as the central bank, using a threepronged approach consisting of ( 1 ) pursuing powerful monetary easing under the comprehensive monetary easing policy, ( 2 ) ensuring stability in financial markets, and ( 3 ) providing support to strengthen the foundations for economic growth. furthermore, with a view to ensuring stability in financial markets, the bank introduced a number of measures in the wake of the earthquake to address its impact on the economy and associated risks. 1. pursuing powerful monetary easing under the comprehensive monetary easing policy “ comprehensive monetary easing ” is a policy package that the bank introduced in october 2010, consisting of three measures. first, the bank lowered its policy interest rate, that is, the target for the uncollateralized overnight call rate – the shortest interbank rate – to “ at 0 to 0. 1 percent ”, thereby indicating that it was pursuing a virtually zero interest rate policy. second, the bank clarified its commitment regarding the time horizon based on the “ understanding of medium - to long - term price stability ” ( hereafter the “ understanding ” ). the “ understanding ” is the level of inflation that each policy board member understands as being consistent with price stability over the medium to long term. the “ understanding ” at present falls in a positive range of 2 percent or lower, and the midpoints of most policy board members ’ understanding are around 1 percent. the bank has made clear that it will maintain the virtually zero interest rate policy until it judges, on the basis

launch a retail cbdc, if necessary. but there does not seem to be a compelling case for it yet, given that todaya€™s digital payment system is already effective and efficient in transferring money. the regulatory approach that mas has taken towards crypto assets or tokens distinguishes the different types of such tokens. if a crypto token is being offered as a security with an expectation of a return, it is regulated under the securities and futures act. if a digital token is being offered as a payment instrument, it is regulated under the payment services act where the focus is on anti - money laundering and technology risk management, and increasingly, customer protection. mas looks at the underlying activity, and the nature and quality of the crypto asset, to determine the specific risk it poses. we right - size our regulations to focus on those risks. we hold digital payment token licensees to the same high anti - money laundering standards that we hold banks to. but we do not regulate them like banks because they do not conduct other activities that 1 / 2 bis central bankers'speeches banks do. payment service providers have a lighter regulatory regime overall compared to banks. this gives them more latitude and space to innovate, and yet for the risks that they pose, we hold them to the same high standard. 2 / 2 bis central bankers'speeches