prices, or combination of those. these are the parameters central banks should watch carefully. but excesses can appear in other forms, too. the challenge for central banks is that economic imbalances have a long “ formative period ” so to speak, spanning much longer than the normal time horizon of monetary policy implementation. therefore, if we focus narrowly on short - term movements in consumer price inflation, this could have an unintended consequence of fostering the creation of bubbles. in response to the bursting of the information technology bubble early this century and the deflation scare associated with that, monetary policy was eased on a global scale and for an extended period of time. unfortunately this has proved to be one of the contributing factors to the global credit bubbles and the resulting mess in the global financial system. central banks should not be hesitant in pursuing aggressive monetary easing when economic conditions warrant. in a severe economic crisis, policymakers have to be careful not to mistake a temporary rebound in the economy, or a false dawn i would say, for a genuine recovery. but there is no economic crisis that never ends. so central banks should also be mindful of a timely exit from those aggressive easing measures. a late exit can be an entry into something worse. finally, let me add that monetary policy alone cannot prevent the recurrence of boom - andbust oscillations. for example, a host of issues remain to be addressed in the regulatory and supervisory arena as well. closing remark since i am almost 40 minutes into my speech, i would like to finish with a final message. what we are confronting is not a garden - variety recession. this is the crisis of a truly global nature. in the early 2000s, japan was able to benefit from the recovery in the global economy. this time, we cannot count on others in getting out of the woods. but over the past year or so, we have together achieved a lot in our fight against the crisis. in that spirit, we will continue to work out both individual and shared solutions. let us move ahead together to rebuild sustainable and efficient financial systems for us and for our future generations. thank you very much for your listening.

disposals of bad assets even more difficult. as late as in 1999, the japanese government finally infused sizable amount of capital into major banks. but even this turned out to be insufficient to revitalize japan ’ s banking industry. fifth, there are similarities on monetary policy front. during the crisis, the bank of japan provided ample liquidity and brought the policy rate down to zero. in so doing, the bank of japan extended the maturities of liquidity - providing operations while expanding the range of acceptable collateral and counterparties. we also introduced a special lending facility to ease funding stress in the markets. furthermore, we purchased private - label securities such as asset - backed commercial paper ( abcp ) and asset - backed securities ( abs ). in this crisis, the us authorities have implemented a variety of measures similar to those innovative steps the bank of japan took in the past. i will take up this point later. what was japan ’ s “ lost decade ”? as i mentioned at the outset, japan ’ s 1990s is described as a “ lost decade ”. this catchy phrase has a straightforward implication that japan ’ s economy was plagued by a long stagnation. but i do not like this characterization because it is too simplistic, misguiding us in terms of the way we address the problems and thereby formulate appropriate policy responses. so i would like to do some reality check again for a more balanced assessment of japan ’ s experience in the 1990s. first, it is true that japan ’ s economy was lackluster throughout the 1990s. in that period, japan ’ s average yearly growth rate was only 1. 3 % in real terms, much less than the preceding decade ’ s average of 4. 0 %. however, even in 1998, the worst year in the postbubble period, japan ’ s growth rate was minus 1. 5 %, apparently less dismal than the sharp slowdown we are facing now. also, even during the financial crisis, japan ’ s real gdp did not fall below the level registered at the peak of the bubble days ( 1989 ). i think this owed much to the authorities ’ efforts to avert financial meltdown by using all means available, including the extension of blanket guarantees for all forms of bank liabilities. second, even in the low - growth 1990s, there were some tentative recoveries in japan ’ s economy, which led people to hastily believe that the economy has finally regained traction. they turned out to