more favorable environment through such means as deregulation, for example. if growth potential is enhanced through these efforts, the business outlook will improve and inflation will gradually become higher. ii. overcoming deflation as early as possible and achieving sustainable growth with price stability following these views on the roles of the central bank, let me now turn to the challenges faced by central banks. of the many challenges, the greatest for japan and hence the bank of japan is obviously to overcome deflation as early as possible and return to the sustainable growth path with price stability. the bank realizes the utmost importance of meeting this challenge, and thus has pursued aggressive monetary easing. there are two elements to the bank ’ s decision at the monetary policy meeting held earlier in the week. “ price stability target ” and the “ open - ended asset purchasing method ” the first is the introduction of the “ price stability target ”, at 2 percent. the bank recognizes that the inflation rate consistent with price stability on a sustainable basis will rise as efforts by a wide range of entities toward strengthening competitiveness and growth potential of japan ’ s economy make progress. based on this recognition, the bank sets the price stability target at 2 percent in terms of the year - on - year rate of change in the cpi. under the price stability target specified above, the bank will pursue monetary easing and aim to achieve this target at the earliest possible time. taking into consideration that it will take considerable time before the effects of monetary policy permeate the economy, the bank will ascertain whether there is any significant risk to the sustainability of economic growth, including from the accumulation of financial imbalances. the second element is the introduction of the “ open - ended asset purchasing method ”. the bank will pursue aggressive monetary easing, aiming to achieve the above - mentioned price stability target, through a virtually zero interest rate policy and purchases of financial assets, as long as the bank judges it appropriate to continue with each policy measure respectively. as the bank has already announced, the size of the current asset purchase program is set to increase by nearly 40 trillion yen over the course of this year. furthermore, the bank has introduced from the beginning of this year a scheme to provide financing to financial institutions, up to the amount of net increases in lending at each financial institution. more than 15 trillion yen would be provided through this scheme by the spring of 2014. meanwhile, with respect to the asset purchase program, after completing the current purchasing method, from january 2014, the bank

shows that not only is it inappropriate to become excessively pessimistic, we should actually be more confident about our potential. if i may add a few words on the recent joint statement between the japanese government and the bank of japan regarding the strengthening of policy coordination, there is a clear recognition of the role that each entity will play : the bank will pursue aggressive monetary easing and the government will formulate and promote measures for strengthening competitiveness and the growth potential of japan ’ s economy. it also states that the government and the bank will work together to overcome deflation early and achieve sustainable economic growth with price stability. this is very significant. the importance of flexibility in monetary policy the decision on the “ price stability target ” by the bank was both a decision on a “ target ” and a flexible inflation targeting framework. as such, let me also explain the latter element. obviously, the effects of monetary policy permeating economic activity and thereafter prices require a considerable and variable time lag. the conduct of monetary policy has to be flexible by examining various risk factors, including those related to financial imbalances, in addition to the assessment of current developments and outlook for economic activity and prices, from the perspective of achieving sustainable growth with price stability. such understanding has been widely shared around the globe ; particularly, in the aftermath of the global financial crisis, major economies of the world have come to emphasize flexibility in the conduct of monetary policy – by, for example, publicly articulating the importance of paying due attention to financial system stability. over the last year, there has been an increasing awareness of such understanding in japan as well. in such circumstances, it is judged transparent and appropriate to use the expression, “ target ”, in order to explain the bank ’ s thinking on price stability. bis central bankers ’ speeches the purpose or principle of monetary policy by the bank is clearly stated in the bank of japan act – namely, it is “ achieving price stability, thereby contributing to the sound development of the national economy ”. obviously, therefore, the bank will manage monetary policy as guided by this aim and pursue the new price stability target set under this aim. with a view to achieving sustainable growth with price stability, the bank will examine the current state of the economy and prices and the outlook thereof, and ascertain whether there is any significant risk, including financial imbalances. such a policy framework is the same as those currently adopted by many other central banks. in this regard, if one