. other features of cash are also challenged. some are quick to claim that new cryptocurrencies such as bitcoin can now offer users the same anonymity which has long been thought to be the unique quality of cash. bis central bankers ’ speeches it has even been said, that cash, that is, notes and coin, is “ on trial ”, to cite the title of a recent conference. 1 the question we must be prepared to answer is : what is the justification for cash as a means of payment on the face of such developments. answering that question could shed important light on some fundamental questions on the nature and role of central banking in general. this is one of the reasons this conference has been arranged. * * * another reason for the discussion has recently been the low - interest rate environment which now prevails in much of the developed world. this situation has focused the attention of economists to the so - called zero lower bound of interest rate policy. the zero lower bound problem results from the availability of cash as a liquid investment alternative, with zero return ( minus storage and insurance costs ). the alternative constituted by cash makes it difficult, perhaps impossible, to push market rates very far into the negative territory. practice is not quite as simple as theory. recent experience tells us that interest rates can be somewhat negative, even if there are no restrictions on banknote holdings. holding large amounts of cash is not costless. as a result, the effective lower bound can be soft, and somewhere below zero. in the proximity of the lower bound, central banks, ecb included, have supplemented their toolkit with forward guidance and with various unconventional measures, such as large - scale asset purchases. these have helped to keep monetary policy effective even in today ’ s exceptional low - interest environment. the question relevant for today is, is the lower bound for interest rates a serious problem for the efficiency of monetary policy? and if it is, is the problem persistent enough so that we should take radical measures to remove the lower bound? there are economists, such as kenneth rogoff, who think that it would be best to discontinue cash altogether, in order to liberate monetary policy from the lower bound, letting interest rates move more freely to both directions. i think this is not the mainstream view now, however. the seriousness of the lower bound problem in the future depends partly on what happens to the average level of interest rates. this in turn depends on the

crisis. at the same time, however, monetary policy became highly complex and difficult to understand for some non - experts. outside japan, there are various debates over why the target level of inflation should be 2 percent, or what would be the most desirable inflation rate. recent studies increasingly suggest that the desirable inflation rate be positive in view of preventing a risk of falling into deflation, based on the experience of the global financial crisis from 2008. however, the proposed specific figure ranges widely from a positive rate close to 0 percent to around 6 percent. meanwhile, seiji adachi argues that, using the data for japan's economy from 1983 through the second quarter of 2017, the inflation rate that would be achieved under certain conditions in a time of an inflationary regime is 1. 94 percent in terms of the cpi inflation rate excluding fresh food and energy. for details, see adachi seiji, " 2 pasento no infure mokuhyo wa dato ka, " keiki to saikuru, no. 64 ( 2017 ) : 3 - 16. the bank has been making a wide variety of efforts including conducting on - site examinations and off - site monitoring of individual financial institutions, providing a wide range of information such as through the financial system report, and cooperating with relevant regulatory authorities in the development of financial regulations. some appear to have joked that central banks'public statements can only be understood by those with a ph. d. in economics. it is true that the bank's current policy is somewhat technical, and we are expected to communicate in detail to gain understanding from experts including market participants and overseas authorities. nevertheless, it is important for central banks to reach out not only to experts but also households and firms, which play the main roles of and are driving forces for japan's economy. 11 regarding households and firms, i am aware that it is important to reiterate the essence of the policy - - that is, what the bank aims at and how it seeks to achieve this - - rather than the details that tend to be highly technical. for example, according to a survey conducted by the bank, many households think that their circumstances become worse off when prices rise ( chart 10 ). no one welcomes price rises when their own income does not increase. thus, it may seem natural that households'tolerance of price rises would not increase easily, but wages generally grew at a higher pace than inflation and households'purchasing power rose in the past