, and a unified application for the euro area. more specifically, the legislation of the european union has activated the european bank recovery and resolution directive ( brrd ) for all member countries and has established the single resolution mechanism ( srm ) in the euro area, as well. the brrd creates such instruments for a preventive recovery and early intervention in a bank, designed to avoid the failure of a bank, as well as facilitate an orderly resolution when banks are failing, to protect the public interest. the new law replaces the standard insolvency proceedings of a bank with the resolution undertaken by the relevant authority. banks ’ failures and financial crises may be common events. they are very costly, as well, which, in some cases, can be as high as 40 – 60 % of the gross domestic product. this includes losses in deposits, weakening of access to finance and loss of public confidence in the financial system, which, in turn, reduces its capacity to support economic growth and decrease poverty. also, standard insolvency 1 / 5 bis central bankers'speeches proceedings for failing banks proved inadequate in times of crisis because they did not address systemic risk nor ensured the continuity of critical functions ; moreover, they did not protect depositors. these procedures require time, long negotiations as well as complex arrangements with creditors, which may damage and further diminish the asset value of the distressed bank, hence causing severe consequences for the real economy. for this purpose, the new recovery and resolution law provides the supervisory and resolution authorities with the legal capacity and the necessary instruments for restructuring bank operations, in the event its possible failure jeopardizes financial stability or undermines other objectives of the regulator. the aim is clear : on the one hand, we have the public interest on financial stability, while, on the other hand, remain the shareholders of the bank, who have voluntarily undertaken the risk by investing in the bank. if the shareholders rely on the possibility of an implied state guarantee for banks, this constitutes a moral hazard on their part, therefore increasing their risk appetite. the implementation of the resolution law formally eliminates the basis for the expectation for any such guarantee. among the costs caused by the failure of a bank, contagion is probably the highest, since it turns the problem of a single bank into a problem for the entire banking sector. it may happen for two reasons : due to the spillover effect of a bank ’ s exposure towards another, as well as due to public panic,

kiyohiko g nishimura : demographic transition, impact of ict, and globalization – a long view of the post - crisis world remarks by mr kiyohiko g nishimura, deputy governor of the bank of japan, at the central bank of the republic of turkey, istanbul, 27 august 2012. * * * introduction : turkey and japan – friendship and cooperation on the rim of asia it is my great pleasure to visit the central bank of the republic of turkey, and i am especially delighted to have the opportunity to speak before you on global economic issues that i think are relevant both to turkey and japan. turkey and japan are nations on the opposite sides of the rim of asia, separated by a distance of some 9, 000 kilometers. however, the distance has not hindered friendship and cooperation between the two nations in the past and the present. we must not forget that the two nations faced the same challenges as they tried to modernize themselves in the second half of the 19th century. it was in this context that the turkish emperor abdul hamid ii sent the frigate ertugrul to japan with more than 600 men on board in 1889. the voyage, as we know, ended in a tragedy caused by a typhoon. nonetheless, the rescue efforts of japanese locals and the subsequent exchanges of goodwill laid the firm foundations of the friendship and cooperation between the two nations. today, the world, including japan and turkey, is facing many challenges, some of which were caused by the recent financial crisis. on this occasion, i would like to share with you some thoughts on issues that i have been thinking about for the last few years. these issues are not directly related to current macroeconomic developments per se, but relate to medium - to long - term influences on the post - crisis global economic environment. my presentation will consist of three parts. first, i will examine three emerging trends that seem to define the post - crisis economy. these three trends are : mismatches in the labor market, lower trend growth, and the end of wage disinflation. i will then turn to the possible root causes of these symptoms. i will identify four : demographic trends, balance - sheet adjustment, the influence of information and communication technology, and globalization / polarization. finally, i will conclude by discussing the policy implications of these trends for the future. 1. economy after the crisis : labor market mismatch, low trend growth and inflation – the united states and japan so, let me jump into