future is called inflation expectations. and although inflation rates tend to fluctuate – reflecting not only the business cycle but also temporary factors such as changes in commodity prices – they are likely to do so at around the level of inflation expectations on average, if medium - to long - term inflation expectations are anchored at a certain level. a numerical definition of what central banks consider as price stability based on a specific price index is about 2 percent in terms of the year - on - year rate of change in the cpi ; this has become the global standard in recent years. while i will not go into detail due to time constraints, this figure – 2 percent – takes into account the upward bias in the cpi, that is, the tendency of the index to overstate inflation, and provides a buffer allowing to sufficiently lower real interest rates should the economy deteriorate. for japan ’ s economy to overcome deflation, it was necessary to dispel the deflationary mindset and raise inflation expectations – which had declined to about 0 percent – to about 2 percent and re - anchor expectations at that level. changing people ’ s expectations is the main aim of qqe. the theory behind qqe attempting to change people ’ s mindset and perceptions through monetary policy is not without historical precedent. for example, while the direction of desired change was the opposite of that in japan, the federal reserve under chairman paul volcker was successful in the late 1970s to early 1980s in substantially lowering inflation expectations, which had been ratcheting upward, through powerful monetary tightening ( chart 3 ). since both unemployment and inflation were surging at the time, such stringent monetary tightening created both political and social challenges. despite such difficulties, however, it was quite clear to chairman volcker what policy steps he had to take to lower inflation expectations : he had to pursue strong monetary tightening by substantially raising short - term interest rates to contain inflation. on the other hand, while qqe would not aggravate unemployment, it faced another problem, namely that the tools for monetary easing were limited, given that shortterm interest rates were close to the zero lower bound. the thinking behind qqe is as follows. first of all, as i discussed earlier, given that shortterm interest rates had declined to zero, the bank, like the federal reserve and the boe, decided to put downward pressure on long - term interest rates through massive purchases of government bonds. the bank then focused on the fact that

saving and borrowing money, but they tend to lack access to well - regulated and appropriate financial services. getting such access helps the poor escape from poverty through a number of channels. the first channel is reducing the cost of obtaining and managing funds by low income households. borrowing loans from regular financial institutions enables the poor to avoid obtaining funds from informal moneylenders at very high costs. by using a safe savings account, they would not need to worry about protecting their physical cash. the second channel is stabilizing the daily lives of the poor. deposits and loans make it possible for them to absorb negative financial shocks, including sickness and injury, as well as changes in the frequency and size of cash inflows. this shock - absorbing effect helps the poor smooth their consumption over time. the last channel is exploiting growth opportunities. absorbing negative financial shocks also helps poor parents allow their children to receive education rather than being incorporated into the labor force. in developing countries, some poor people are informal business owners. access to financial services can enable them to invest in their own businesses. however, progress in financial inclusion for individuals appears to have been slow in developing asia. in 2014, the percentage share of adults with savings accounts was 48 percent in developing east asia and pacific, and 44 percent in south asia. in high - income countries around the world the figure was 108 percent, and in latin america it was 70 percent. 10 the source of the figures on account ownership is the world bank's global findex. to encourage the poor to open savings accounts and make deposits, it is necessary to introduce hands - on policies that reflect the specific needs of individual countries. economic factors are not the only reason why poor people often do not save money ; there are also social constraints, regulatory barriers, low financial literacy, and psychological factors. a recent empirical finding shows that factors preventing poor people from opening savings accounts include high charges, distant bank outlets, weak legal rights, and political instability. 11 even when the poor do open accounts, whether or not they actually save money in those accounts is a separate question. they need to have other incentives to do so. such incentives may vary by country. for example, a field experiment in rural kenya finds that effective incentives include earmarking the poor's deposits for emergency use, encouraging them to save money in a group setting, and providing them with credit conditional upon saving money. 12 financial inclusion is important for small companies as well. in general, small companies are informationally