shocks occur, the financial system is able to absorb those shocks, rather than to amplify their impact on the economy. we ground what we do in two elements of good macro - prudential policymaking : macro - prudential policy should be targeted to provide a net benefit to the overall 3 / 7 bis central bankers'speeches economy. where interventions incur costs, these should only be imposed when they are outweighed by the benefits over the full cycle. this is perhaps equivalent to starting a course of new medication, where a good doctor must be aware of potential side effects as well as intended benefits. we must also recognise that there will be occasions when interventions are not yet needed, as emerging risks are not yet systemic in nature. to return to our analogy, a good doctor might decide not to start medication, but instead simply monitor a patient ’ s general health to judge better how to improve it. macro - prudential policy should be ready to adapt to change, allowing the economy to expand and innovate safely. change always brings with it opportunities and risks and so our macro - prudential framework will need to evolve. to overuse the health analogy once more, doctors need to adapt. a doctor in the 1960s, for example, would never have had to think about the health effects of vaping. challenges that lie ahead ten years after establishing the fpc, we have reached the point where we have both made the case for macro - prudential policy, and built a macro - prudential framework designed to ensure the sector is resilient to stress. in other words, we have pulled together the skeleton for a healthcare plan and convinced the patient that they need it and that it needs to be updated regularly. these are important achievements. indeed we need to make sure we hang on to them even as memories of the global financial crisis fade. but we need to decide the plan for the coming months and years too. recent shocks – the covid pandemic, and more recently, russia ’ s invasion of ukraine – and structural changes to the financial system have reaffirmed that our work is not yet done. let me briefly mention a few of the lessons from our experience in covid - 19. first the capital framework does not in practice support use of bank capital buffers in a stress as we intended7. and that would have mattered a lot in the absence of the substantial government support for the corporate sector. second, we need to change

a gradual recovery in overseas economies. however, the pace of the recovery in europe and the united states is likely to be moderate. in addition, it seems likely that the growth in east asian economies, which has been fairly rapid so far, has slowed at least for the time being due to the impact of severe acute respiratory syndrome ( sars ). we must continue careful monitoring of japan ’ s economy, taking into account the effects from the developments in overseas economies and japan ’ s financial system. iii. monetary policy of the bank of japan a. conduct of monetary policy in order to place the economy back on a sustainable growth path and overcome deflation as soon as possible, the bank has been implementing extraordinary monetary easing measures, which far exceed the category of “ conventional ” monetary policy. in march 2001, the bank implemented the “ quantitative easing ” framework to increase further its liquidity provision to the money market in a situation where short - term interest rates had declined to virtually zero. the outstanding balance of current account deposits at the bank expanded from 4 trillion yen at the time to close to 30 trillion yen at present. the bank announced that it would continue the framework of the quantitative easing until the consumer price index ( cpi ) records a yearon - year increase of zero percent or more on a sustainable basis. the bank also steadily increased its purchases of japanese government bonds ( jgbs ), and is currently purchasing a little less than 15 trillion yen worth of jgbs annually, which is roughly equivalent to half the total value of newly issued government bonds. the bank also introduced the lombard - type lending facility whereby financial institutions can borrow funds, within the eligible collateral pledged, from the bank at the official discount rate that is now 0. 1 percent. the bank has widened the range of eligible collateral to asset - backed securities ( abss ) and many other new financial assets. as i mentioned earlier, several central bank officials overseas have commented recently on conceivable options of monetary easing under the “ zero lower bound ” of short - term interest rates. as possible measures to be taken solely by the central bank, they raised the increase of liquidity provision, the announcement to continue monetary easing into the future, the increase of the outright purchases of government securities, extending the central bank ’ s discount windows to commercial banks with low interest rates, and widening the range of eligible collateral. the bank has already implemented most of these unconventional measures in its quantitative easing framework. the effects of extraordinary easing measures by the