recently. competition is of the essence. in many sectors, rents are appropriated by special interest groups and should be returned to the people of europe. finally, investment in research, human capital and infrastructure is key to ensuring that the negative impact of austerity remains limited in time and does not weigh down on the long - term growth potential. new ways of pooling resources and financing the common provision of public goods should be found. i conclude on a positive note. overall, the euro area has a high private saving rate and sound fiscal fundamentals, with deficit and debt ratios that are much lower than in the us, the uk or japan. its workforce is industrious and highly skilled ; its firms are innovative and do not fear global competition. if the euro area unites and overcomes the present crisis of confidence, it will emerge as a strong economy for the rest of the 21st century. i thank you for your attention. bis central bankers ’ speeches

to talk about the conduct of monetary policy. in april this year, the bank committed to achieving the 2 percent price stability target at the earliest possible time, with a time horizon of about two years, and introduced the qqe to underpin the commitment. specifically, it would increase the monetary base at an annual pace of about 60 – 70 trillion yen and double the monetary base in two years. in order to do so, it would purchase japanese government bonds ( jgbs ) so that the amount outstanding of jgb holdings would increase at an annual pace of about 50 trillion yen ( chart 12 ). while the chart shows the outstanding amounts of the monetary base and jgb holdings as of end - 2013 and end - 2014, these are projected amounts under the current policy and do not suggest in any way a time limit of the policy conduct. as i will mention later, the bank will continue with the qqe, aiming to achieve the price stability target of 2 percent, as long as it is necessary for maintaining the target in a stable manner. the effects of the qqe are expected to carry through the economy via several different routes, and the most important of these is to lower real interest rates. to be specific, first of all, by committing to achievement of the 2 percent price stability target at the earliest possible time and announcing the continuation of a new phase of monetary easing into the future to underpin that commitment, the bank aims to drastically change people ’ s expectations and raise inflation expectations. second, it will put strong downward pressure on nominal long - term interest rates through massive purchases of jgbs. consequently, real interest rates could be lowered if the extent of a pick - up in nominal rates can be contained within the extent of a rise in inflation expectations. and the decline in real interest rates is expected to have the effect of stimulating business fixed investment and household spending. for the last eight months, our endeavor on this front has been successful. according to surveys on households and economists, inflation expectations seem to have been rising on the whole ( chart 13 ). by contrast, long - term rates have remained stable at a low level of around 0. 6 percent in japan despite the rise in long - term interest rates in other advanced economies ( chart 14 ). therefore, real interest rates have been declining. under such stimulative effects, japan ’ s economy has been recovering moderately and the year - on - year rate of change in the cpi has turned positive.