as i described earlier, it is necessary to augment the momentum of the virtuous cycle that has emerged during the process toward achieving this target, and put an end to the " lost two decades " for good by realizing the target at an early stage. as a member of the policy board of the bank, i will continue to devote the best of my abilities toward achieving and maintaining the price stability target. thank you for your attention. for details about japan's prolonged stagnation, see the following publications : ( 1 ) koichi hamada, anil kashyap, and david weinstein, japan's bubble, deflation, and long - term stagnation ( massachusetts : the mit press, 2010 ) ; ( 2 ) masazumi wakatabe, japan's great stagnation and abenomics : lessons for the world ( new york : palgrave macmillan, 2015 ) ; and ( 3 ) kataoka goushi, nihon no " ushinawareta 20 - nen " : defure o koeru keizai seisaku ni mukete [ japan's lost two decades : for economic policies to overcome deflation ] ( tokyo : fujiwara - shoten, 2010 ). see adachi seiji, " 2 pasento no infure mokuhyo wa dato ka " [ is an inflation target of 2 percent appropriate? ], keiki to saikuru ( japan association of business cycle studies ), no. 64, november 2017. adachi estimates a new keynesian phillips curve by adopting the framework of the logistic smooth transition autoregressive model, on the assumption of two regimes ; namely, a " deflationary regime " and an " inflationary regime. " looking at the estimates on the probability of a regime change, the figure for the april - june quarter of 2017 is estimated at 57. 8 percent. while this is greater than 50 percent - - the threshold between the " deflationary regime " and the " inflationary regime " - - it suggests that the economy is still distant from 100 percent, a level that would indicate the economy's complete overcoming of deflation. economic activity, prices, and monetary policy in japan speech at a meeting with business leaders in okayama march 1, 2018 goushi kataoka member of the policy board of the bank of japan chart 1 global economy projections of real gdp growth by major economies ( as

denied that banks ’ profits will plunge. the profitability of housing loans also warrants careful monitoring. in addition, consumer loans such as card loans and car loans are an area where potential needs exist over time. with a view to its potential, the major banks have been increasing their capital subscription to consumer credit, credit card, and consumer finance companies. as explained earlier, those affiliated companies have not contributed to increasing the profits of financial institutions, while the future developments in the area of consumer loans warrant attention. lending to small - and medium - sized firms, and provision of risk money third, fund provision to small - and medium - sized firms. firms ’ funding conditions rapidly deteriorated from the autumn of 2008 to the beginning of 2009, and have been recently improving, partly due to the recovery of cp and corporate bond markets. many small and medium - sized firms still view their funding conditions as tight, and the bank considers that the smooth fund provision to small and medium - sized firms continues to be an important challenge for corporate finance in japan. looking at the future of japan ’ s economy, how to provide risk money to small - and mediumsized firms with high technology would be a challenge for the financial system. in that case, it becomes important to apply part of households ’ ample financial assets to risk money. in japan, while the importance of venture capital has repeatedly been argued, it has not grown in a significant manner so far. providing risk money smoothly to firms that have a possibility of leading japan ’ s future economic growth is one important challenge in the area of retail banking. the bank will keep monitoring with strong interest what type of financial institution will play a role of intermediation through what type of channel. concluding remarks the current financial crisis has posed various challenges to the bank of japan. one of them is, from a macroprudential perspective and taking into account the interconnectedness between the real economy and the financial system, to analyze and assess the risk of the financial system as a whole. the bank of japan has been tackling such challenge through financial system report and others, and intends to further enhance its efforts as well as to continue to strive to properly gauge and assess the risk inherent in the financial system. on that basis, the bank considers that how to utilize such assessment in monetary policy or to utilize in further strengthening of financial institutions ’ risk management through on - site examination, off - site monitoring, and the activities of the center for advanced financial technology, would be our next