my view is that, in general, the momentum toward price hikes is starting to increase. moreover, i feel that the perception of the general public toward price hikes has gradually become more positive recently, as reflected in major rises in the price of stocks of firms that have announced price hikes. in other words, given the evidence of successful cases of price increases, more people have begun to think that firms do not always 4 / 7 bis central bankers'speeches lose customers by raising the price of the goods and services they offer. consumers might be gradually showing their understanding of the situation firms are placed in, hearing more frequent news reports of labor shortages. in sum, despite the relatively weak price developments at present, a cyclical mechanism toward price increases is likely to operate going forward, as labor market conditions tighten further with improvements in economic activity. there are signs of such a mechanism working, and in my judgment, a process toward price increases has been evolving steadily. iii. monetary policy a. quantitative and qualitative monetary easing ( qqe ) with yield curve control in september 2016, the bank introduced qqe with yield curve control as a new framework for strengthening monetary easing. the framework consists of the two components of an inflationovershooting commitment and yield curve control. under the inflation - overshooting commitment, the bank commits itself to continuing to expand the monetary base until the observed year - on - year rate of increase in the cpi, for all items less fresh food, exceeds the price stability target of 2 percent and stays above the target in a stable manner. for people to regard a rise in prices of around 2 percent every year as a matter of course, i believe it is important that the bank shows such strong commitment and that people actually experience an inflation rate of above 2 percent. under yield curve control, the bank facilitates the formation of short - and long - term interest rates that are considered most appropriate in light of the 2 percent price stability target. in the bank ’ s current guideline for market operations, the short - term policy interest rate is set at minus 0. 1 percent and the target level for yields on 10 - year japanese government bonds ( jgbs ) is set at around 0 percent. since the introduction of yield curve control a year ago, short - and long - term interest rates have thus far been maintained at levels consistent with the guideline for market operations. meanwhile, with the shift in the bank ’ s main operating target from quantity to interest

institutional traders who trade in large lots. the long tenor contracts and management of cash - flows for extended periods of time ( e. g. 5, 10, 20 years ) are uncommon in exchange traded instruments which are possible in otc trades ( e. g., ois up to 5 year tenor are very active in indian market ). hence, globally attempts at trading of irs on exchanges met with little success. for instance, exchange trading of interest rate swaps launched on the chicago mercantile exchange ( cme ) witnessed minuscule trading volumes. further, validity of otc derivatives under indian laws necessitates that one of the counterparties to the transaction has to be a reserve bank of india regulated entity. it is extremely difficult to ensure this condition in an exchange - traded environment. v. iv. iv migration to central clearing / ccps 39. globally broad objective for regulatory reform is that otc derivative products have to migrate to central clearing. only products meeting certain conditions, such as, standardisation ; relative lack of complexity in contract terms ; sufficient market liquidity ; and readily available pricing information can migrate to central clearing. regulators are exploring the possibility of mandating the migration to central clearing and / or incentivising. for example basel iii capital rules create an incentive to move to central clearing because exposures to a ccp will generally attract a lower capital charge than other bilateral exposures. 40. a large number of legal / operational issues, such as, inter - operability across different ccps, legal complexity, regulatory uncertainties, applicability of insolvency regimes, default management processes of ccps and potential increase in collateral requirements are engaging regulators ’ attention. 41. in india, guaranteed clearing exists for usd / inr forward transactions. rupee irs and forward rate agreements ( fra ), which form the bulk of interest rate derivative transactions, are currently being centrally cleared in a non - guaranteed mode. an “ in principle ” decision to bring irs and fra transactions in the indian rupee within the ambit of guaranteed settlement has been taken. though, it is not mandatory for market participants to clear their trades through ccil, more than 90 per cent of irs trades are cleared through ccil ’ s nonguaranteed settlement system. therefore moving irs to central clearing is expected to be smooth. 42. recently, reserve bank has issued guidelines on capital requirements for bank exposures to central counterparties. the guidelines prescribe the capital requirements for banks ’