all, if it becomes revealed to the market that a financial institution is to be treated as a sifi, this could in fact induce moral hazard. in addition, looking back at the experience of japan ’ s financial crisis, whether an institution is systemically important or not depends on the condition of the financial system, and also on the effectiveness of the existing resolution regime. furthermore, considering the essence of the moral hazard problem, the question of how to deal with sifis needs to be contemplated from various perspectives. for example, we need to take into account perspectives on containing the crisis as well as preventing it, and the balance between regulation and supervision. to be specific, capital surcharges should not be the only measure for dealing with sifis. there are many, not mutually exclusive, alternatives to capital surcharges, such as liquidity surcharges, strengthened supervision, and improvements in resolvability. i believe it would be appropriate for each country to choose the best practice from such measures or their combinations, depending on the environment surrounding its own financial system. balance in the size of financial safety nets among jurisdictions ; need for global coordination thirdly, balance in the size of financial safety nets is needed among jurisdictions. with the globalization of financial institutions ’ operations, they have become more interconnected. likewise, households now have more foreign assets such as foreign currency deposits and foreign bonds. these circumstances indicate the increasing importance of having a crossborder perspective when developing financial safety nets. for example, regarding deposit insurance, a large - scale deposit shift between countries in europe was observed in the fall of 2008 due to gaps in deposit insurance coverage. some asian countries raised their coverage limits in order to maintain the competitiveness of their banks. these examples demonstrate the importance of global coordination in the designing of deposit insurance. another issue revealed in the aftermath of the failure of lehman brothers is the need for a resolution regime that facilitates the orderly wind - down of failing financial institutions in a cross - border context. obviously, each country ’ s legal system depends substantially on its particular social framework, and convergence of resolution regimes is not easy. it is also not necessarily appropriate. however, it is becoming more important for authorities to have a good understanding of their respective resolution regimes and to communicate closely in the actual resolution process. in the aftermath of the recent crisis, the establishment of crisis management groups among supervisory authorities and central banks for internationally active financial institutions has been an important step forward in this regard

. it is necessary for the authorities concerned to continue coordinated work on this issue. iii. the role of central banks in maintaining financial stability the experience of the financial crisis has brought renewed attention to the role of central banks in financial safety nets, which in turn contribute to financial stability. this has led to the assignment of macro - prudential roles and financial regulatory authority to central banks in the united states and europe. in this respect, the bank of japan has had an important role in both micro - and macroprudential dimensions for maintaining financial stability. from a micro - prudential perspective, the bank conducts on - site examination and off - site monitoring of a wide range of financial institutions including securities firms, and urges improvement in risk and business management when necessary. from a macro - prudential perspective, the bank implements appropriate policy measures based on its analysis and assessment of the condition of the financial system as a whole by utilizing the information obtained from financial institutions as well as from the markets. measures taken by the bank from a macro - prudential perspective during the crisis include resumption of stock purchases held by banks, and provision of subordinated loans. in this way, the bank of japan plays a critical role in maintaining the stability of japan ’ s financial system. the bank will continue to make every effort, in both micro - and macroprudential dimensions, to ensure and maintain this financial stability. thank you very much for your attention.