bank of japan presents summaries of articles published in the august edition of its quarterly bulletin bank of japan, communication, 29 / 8 / 97. revision of japan ’ s flow of funds accounts introduction bank of japan compiled the first flow of funds accounts in 1958, covering data for the years from 1954 to 1957. since then, the flow of funds accounts have been used extensively, for example, as a source for producing the capital finance account of the national accounts, and as the only statistical material that provides an overall picture of japan ’ s financial structure. however, the present flow of funds accounts require improvement in many respects. for example, although the framework of the flow of funds accounts basically conforms to that of the system of national accounts established in 1968 by the united nations ( hereafter, 1968 sna ), various inconsistencies remain between the two due to inadequate availability of data. this results in various limitations when one tries to obtain a combined picture of real economic activity and financial activity using the flow of funds accounts and the national accounts. it should also be noted that the 1968 sna itself does not fully reflect the changes in economic and financial structures that have occurred in the years since it was established. in 1993, therefore, the statistical commission under the economic and social council of the united nations ( hereafter, ecosoc statistical commission ) adopted a draft amendment to the sna ( 1993 sna ) with a view to creating a framework that better reflects the recent economic and financial environment. further, in response to increasing demand for internationally standardized financial statistics, the international monetary fund ( imf ), at the behest of the ecosoc statistical commission, is preparing a manual on monetary and financial statistics ( hereafter, the imf manual ) to supplement the 1993 sna. a number of countries have initiated reviews of their flow of funds accounts in accordance with these developments. statistics that provide a highly reliable overview of financial activities are indispensable for tracing changes in the financial structure, for examining the roles of each economic sector, and for considering the implications of these factors for the real economy. such statistics are also useful in considering various issues concerning financial systems. if these statistics are compiled in accordance with international standards, international comparability of these statistics will be improved. it is for these reasons that the bank is revising japan ’ s flow of funds accounts. in doing so, the bank has decided to make public its basic thinking underlying the revision

kiyohiko g nishimura : funding for financing economic growth – a schumpeterian perspective remarks by mr kiyohiko g nishimura, deputy governor of the bank of japan, at the gic ( global interdependence center ) conference on “ the global financial crisis – lessons from japan ”, tokyo, 3 december 2012. * i. * * introduction : beyond standard macroeconomics having experienced prolonged stagnation after the global financial crisis of 2008, economists, market participants, and policymakers alike have arrived at the painful recognition that per capita real output has a long path toward recovering its pre - crisis level. to tackle this stagnation, the standard macroeconomic prescription is simple and straightforward : the policymaker should conduct an expansionary policy to fill the gap between actual and potential gdp, treating potential gdp as exogenously given. although it is difficult to tell in real time whether the observed weakness in economic recovery is cyclical or structural, it seems obvious that the current gdp gap is large no matter how one measures the potential. under this prescription, and facing the zero bound on nominal interest rates, central banks in advanced countries are currently employing unconventional measures, such as large - scale asset purchase programs. however, i believe we need to go beyond such a standard way of policy thinking in order to bring about effective policy in this slow growth environment. we should consider policies that influence the growth potential itself. in particular, i suggest that central banks should find tools to support the efforts to strengthen the foundation for economic growth. this may look even more unconventional than already unconventional asset purchase programs. but it should be noted that price stability, the goal of central banking, becomes difficult to achieve once growth expectations diminish and the economy becomes prone to hit the zero bound. 1 thus, it is absolutely necessary to raise growth expectations in order to alleviate the difficulty in maintaining price stability. and i presume that monetary policy can influence the growth potential over a long term, although such effects are uncertain and indirect. indeed, there have been several signs of these diminished growth expectations in many countries. the aftereffect of a financial crisis has been discussed extensively. 2 population ageing is another factor that is already impacting advanced economies and coming soon to several emerging economies. 3 a not - so - growth - friendly change in the current technological persistent deflation found in japan in the past decade was at least partly caused by recurrent negative shocks that caused continuously diminishing growth expectations