participants are holding a cautious view toward developments in the u. s. economy, but no new concerns are being observed, and therefore i suppose their view is too pessimistic. the european economy also has continued to recover moderately ( chart 6 ). bis central bankers ’ speeches it is true that the chinese economy, which has been attracting the world ’ s attention, has continued to be in a state of deceleration due to downward pressure from an overhang of production capacities and inventory adjustments in the manufacturing sector ( chart 7 ). other emerging economies and commodity - exporting economies as a whole also remain in a situation of deceleration, as the effects of the slowdown in the chinese economy have spread to them and as the decline in commodity prices has been protracted. some economies in asia, however, have seen a pick - up in it - related demand. looking ahead, the chinese economy is likely to broadly follow a stable growth path, albeit at a somewhat slower pace mainly in the manufacturing sector, as authorities proactively carry out policy measures to support economic activity. other emerging economies and commodity - exporting economies as a whole are expected to gradually increase their growth rates, due mainly to the effects of the recovery in advanced economies and of economic stimulus measures, although some commodity - exporting economies are likely to remain in a situation of deceleration for the time being. ii. the bank ’ s monetary policy management basic mechanism of monetary easing however, after the turn of the year, the global financial markets have continued to be volatile, as i have mentioned earlier. at the monetary policy meeting held at the end of january 2016, many policy board members pointed out that there is an increasing risk that such volatility in global financial markets might delay an improvement in business confidence of japanese firms and conversion of the deflationary mindset, and might also negatively affect the underlying trend in inflation. to preempt the manifestation of this risk and to maintain momentum toward achieving the price stability target of 2 percent, the bank decided to introduce “ qqe with a negative interest rate. ” now, i would like to focus on the bank ’ s monetary policy management. to begin with, let me review the basic transmission mechanism of monetary easing that the bank had pursued, and then talk about the newly introduced “ qqe with a negative interest rate. ” generally speaking, the main transmission channel of monetary easing would be as follows : it will cut the real interest rate – that

previous high point, at the end of 1995, was only 12 % above the same long - term average. since the introduction of the euro in 1999, the volatility of the eur / chf exchange rate has averaged approximately 5 %. 3 in august it rose to almost 30 %. as chart 1 shows, three of the largest ever daily negative movements in the eur / chf exchange rate also occurred in this period. since the introduction of the minimum exchange the markit itraxx europe index, for example, which is composed of 125 investment grade entities from six sectors ( auto, consumer, energy, financial, industrial and tmt ), more than doubled between july and september. likewise, the itraxx sovereign western europe index, consisting of 15 sovereign cds across europe, rose by approximately 70 % in the same period. this is an approximation of the real effective exchange rate, assuming constant weights and inflation differentials. annualised volatility computed over one calendar month on the basis of daily movements. bis central bankers ’ speeches rate on 6 september, eur / chf volatility has fallen below 10 %, though it remains high from a historical perspective. the introduction of the minimum exchange rate also had an impact on some of the dynamic properties of the swiss franc. as the red bar on the left side of chart 2 suggests, there was previously a positive correlation between the movements of the swiss franc and those of risk indicators such as the vix index, i. e. investors tend to buy swiss francs when perceived risk increases. in the same vein, the blue bar on the left of the chart shows that the correlation between the movements of the swiss franc and those of risky assets, such as the equity shares on the msci world index, has historically been negative. in other words, negative market developments have often been accompanied by a rising swiss franc. intriguingly, as the right side of chart 2 shows, the introduction of the minimum exchange rate appears to have had a significant impact on these correlations. the snb ’ s implementation of monetary policy : liquidity measures on 3 august, the snb started to implement liquidity measures against the massively overvalued swiss franc. let me provide some further information on these operations. that day, the snb announced that it was narrowing the target range for the three - month libor from 0. 00 – 0. 75 % to 0. 00 – 0. 25