b. new monetary policy framework based on the comprehensive assessment, the bank decided to introduce qqe with yield curve control as a new framework for strengthening monetary easing. the framework consists of the two components of yield curve control and an inflation - overshooting commitment. under yield curve control, the bank controls short - and long - term interest rates through open market operations, such as purchases of jgbs. it sets the short - term policy interest rate applied to part of financial institutions'current accounts at the bank ( the policy - rate balances ) and the target level for 10 - year jgb yields. in the past, many central banks have conducted monetary policy by controlling short - term interest rates. controlling the long - term interest rate is a new challenge, but it seems to be functioning smoothly so far. by adding long - term interest rate control to the tools of monetary policy, i think that it has become possible for the bank to implement monetary easing measures more flexibly, taking account, for example, of the effects on the financial intermediation, and that the sustainability of these measures has been enhanced. under the inflation - overshooting commitment, the bank commits itself to continuing to expand the monetary base until the year - on - year rate of increase in the observed cpi for all items less fresh food exceeds the price stability target of 2 percent and stays above the target in a stable manner. in general, central banks have conducted monetary policy in a forward - looking manner, given that the effects of monetary policy spread to the economy with a certain time lag. in this regard, the bank's new framework, which is linked to the observed cpi, is an extremely strong commitment. through this commitment, the bank aims to enhance the credibility of achieving the price stability target among the public, and to raise inflation expectations. in this manner, the new policy framework consists of measures that could be regarded as extraordinary for a central bank, including control of the long - term interest rate and commitment linked to the observed cpi. the bank has considered such flexible and decisive policy conduct as necessary in order to dispel people's deflationary mindset that has taken hold due to deflation that has lasted for a long period, and to push up the inflation rate amid a variety of exogenous factors. with this framework, the bank has shifted the operating target for its monetary policy from the quantitative to the interest rate aspect. however, needless to say, these are two

to reducing the risk of financial crises, which is the most serious uncertainty. in fact, to this end, vigorous and systematic efforts have been made in the international community, resulting in a plethora of fora, reports and proposals. it is indeed an encouraging development that many international committees are striving to discover and improve weaknesses inherent in the global financial system, and experts of the financial stability forum have been double - checking such efforts. we must thus ensure that the results obtained from these precious efforts are implemented by the authorities of each country and market participants, and in this context i agree to the point made by many that appropriate incentives are needed. of the various efforts to improve market infrastructure, let me mention the study called the “ fisher ii ” project, being undertaken by the multi - disciplinary working group on enhanced disclosure, chaired by mr peter fisher of the federal reserve bank of new york. this developed from the study by the central bank group at the bis, and it is currently examining ways to improve disclosure necessary for evaluating counterparty risk in collaboration with the supervisory authorities of banks, securities companies, and insurance companies, as well as with the support of major market participants. this study is important, not only because cooperation between the private financial sector and the supervisory authorities in charge of the financial service industry overall is realized, but also because it may reveal the new boundary of disclosure needed for such public goods as market stability in the context of recent crises. moreover, we need to check whether or not market pressure, which is regarded as a main incentive, would result in establishing advanced disclosure as a market practice. at present, it is only a hypothesis that more advanced disclosure would lead to more appropriate risk management by market participants, let alone to further enhancing financial system stability through the better grasp of macro risk profile. in this regard, one lesson we have learned from the bubble period in japan is that although individual financial institutions conducted risk management, which eventually turned out to be insufficient, enormous concentration of risk could arise at a macro level. hence, we may need some other way to grasp the size and profile of risk at a macro level. still, the study of how financial institution disclosure should be pursued has the possibility of linking financial system stability at a macro level to the incentives of individual market participants, and i believe it is worthwhile to explore such a possibility to the maximum extent. the next issue is how the central bank and the authorities should respond to increased uncertainty that cannot be directly controlled. recently,