states – which unsurprisingly want to retain their influence. thus, whatever institutional compromise is aimed at on the european level, it will touch on delicate national economic doctrines. this has been even labelled the “ battle of ideas ” about the euro. 1 it comes about quite naturally : reform solutions are built on narratives about causalities. and narratives about causalities quickly lead to responsibilities. in europe, quite resilient, opposed narratives have evolved in parallel to divergent economic realities. and in keeping with the confirmation bias, it tends to be easiest to find evidence for one ’ s own theory. this is why consensus about the scope of european responsibilities is still a matter of debate beyond those about restraining national powers. for example, the eu as a centralised entity that could mitigate imbalances would require a common understanding of good economic policy. so the challenge is not only about bridging differences in economics, but also about bridging gaps in ideas and political attitudes. 4. conclusion : easy to explain, tough to maintain ladies and gentlemen monetary integration is easy to explain, but tough to maintain. it usually comes with additional necessities, for each participating country and for the community as a whole. during my speech, i have emphasised both structural and reform challenges in the euro area. but of course, you won ’ t be presented with the full picture of the european project even from a central banker. this is because even though it is not ( yet ) a political union, it is to a great extent a political project. its worth can hardly be measured in economic terms alone. in fact, economists have frequently been surprised at the determination of integrationists. in all parts of europe, the union is not only seen as part of the problem, but usually also as part of the answer. recently, amidst a wave of euro - scepticism, people in my town of frankfurt held weekly demonstrations in support of europe. in this respect, the monetary union contributes to a search for common solutions as an – if you want to call it that – “ automatic response ” to political isolation. our union compels us to seek common solutions instead of separate policies. being here in pretoria i of course wonder what role this drive towards common solutions could play in africa in the future. if you ask me, it does not make structural challenges any easier. but if a currency union is not just a number of steps but a journey, i find it very comforting to see

miyako suda : the current situation of and outlook for japan ’ s economy and the conduct of monetary policy summary of a speech by ms miyako suda, member of the policy board of the bank of japan, at a meeting with business leaders, yamagata, 1 december 2010. * * * introduction it is a great pleasure to address this meeting on economic and financial matters. the topic i would like to discuss today is the current situation of, and outlook for, japan ’ s economy and the bank of japan ’ s conduct of monetary policy. let me begin by looking at developments in economic activity and prices in japan. i. economic activity and prices in japan a. the current situation japan ’ s economy still shows signs of a moderate recovery, but the recovery seems to be pausing. exports and production, which had been increasing reflecting the improvement in overseas economic conditions, have recently been decelerating as the pace of recovery in overseas economies is slowing down. private consumption had continued to recover mainly due to the effects of various demand - boosting policy measures targeted at durable consumer goods, but more recently has been decreasing following the spike in demand before these policy measures expired. i will first look at developments in demand, economic activity, and prices overseas, and then make a more detailed examination of domestic demand in japan. 1. overseas demand, economies, and prices breaking down japan ’ s real exports by destination, east asia accounted for more than 50 percent, the united states and the european union for slightly less than 30 percent, and other countries for the remaining 20 percent. until recently, japan ’ s real exports had been on an upward trend, led by the increase in exports to emerging and commodity - exporting economies. however, growth in exports has recently been decelerating due to a number of factors, including measures by the chinese government to prevent an overheating of the economy, the effects of which have materialized with a time lag ; inventory adjustments in itrelated goods, particularly with regard to those exported to the nies and asean countries ; and the appreciation of the yen. a. overseas economies i will now move on to developments in overseas economies as a whole, which underlie the trends in japan ’ s real exports. with inventory restocking – the driving force of the recovery after the lehman shock – having run its course and the demand - boosting effects of fiscal policy measures waning, the pace of economic growth has been slowing since summer 2010.