. and the financial turmoil after the failure of lehman brothers, the global economy has not fallen into a deep and prolonged slump such as that experienced in the great depression in 1930s ( chart 11 ). as to the background of such resilience in the global economy, let me point out the contribution made by emerging economies, especially by emerging asia, as well as various policy responses taken by governments and central banks worldwide. with the strong growth of emerging economies, bis central bankers ’ speeches the global economy now has multiple growth “ pillars ”, which fortify its resilience. needless to say, it may not be appropriate to overemphasize so - called “ de - coupling ” in this globalized economy. nonetheless, further endogenous economic development associated with the rise in living standards in asian and other emerging economies will surely continue enhancing the robustness of global economy. asia as a new frontier for global economic growth i would also like to emphasize that the high growth of asia, which enhances the resilience of global economy, also expands new growth frontiers for non - asian economies. as many advanced countries are now facing common issues of an aging population and fiscal imbalances, enhancing the growth potential has become an imminent challenge for these countries. 1 in addition, the solution to the european debt problem ultimately rests with the ability and efforts of peripheral countries to boost their productivity and growth sufficiently. in this regard, asian economies could offer great potential, as they have a vast pool of human resources and are now becoming major high - tech suppliers. moreover, emerging asia is expected to substantially grow as consumption markets. according to an industry survey conducted early this year, china has surpassed the u. s. to become the world ’ s largest smart phone market by shipments. to exploit asia ’ s potential, advanced economies should build systematic and productive linkages with asian economies, instead of viewing asia simply as labor - intensive production base. case in point is japanese retailers, medicare service industries and private education industries which used to focus on the domestic markets. they are now formulating global business strategies targeting the broader asian market. moreover, through their environmental and energy - saving engineering technologies, advanced economies could contribute to alleviating growth constraints associated with the rapid rise in living standards in asia. it would also be fruitful for advanced economies to consider how they could make use of asia ’ s human resources and supply capacity to overcome the problems associated with their aging population. establishing such strategic and coordinated linkages

s. economy, the possibility of emerging and commodity - exporting economies making a smooth transition to the sustainable growth path, and the effects of the recent bilateral relationship between japan and china. recent developments in financial markets appear to assume that the global economy will emerge from the deceleration phase and pick up. the bank will continue to carefully examine whether the uncertain factors surrounding the global economy will be dispelled smoothly. ii. conduct of monetary policy next, i will explain the bank ’ s conduct of monetary policy. japan ’ s economy has suffered from deflation for nearly 15 years. this is an extraordinary situation even on a global scale. a vicious cycle – where a decline in prices causes wages and profits to contract, thereby reducing investment and consumption, consequently leading to a further decline in prices – has been causing a deterioration in japan ’ s economy. overcoming deflation at the earliest possible time is the most critical issue facing japan ’ s economy. ensuring price stability is the mandate of the central bank, and the role of the bank in overcoming deflation is extremely important. the bank has engaged in a wide range of efforts – from implementing the zero interest rate policy and the quantitative easing policy, to pursuing monetary easing consisting of comprehensive monetary easing, ensuring financial market stability, and providing support to strengthen the foundations for economic growth in more recent years – but fallen short of overcoming deflation. there are many factors – both at home and abroad – exerting downward pressure on prices in japan : an increase in cheap imports from overseas, increased distribution efficiency mainly due to deregulation, and the consequent low - price strategies of firms as well as an increased preference among households for low prices. notwithstanding these factors, it is the bank ’ s mandate as the central bank to achieve price stability by addressing them. indeed, no other country in the world is undergoing such a prolonged period of deflation. the government announced, for overcoming deflation and achieving economic revitalization, a “ three - pronged strategy ” – consisting of bold monetary policy, flexible fiscal policy, and a growth strategy that bis central bankers ’ speeches encouraged private sector investment – and swiftly undertook responses including the emergency economic measures. an upturn in stock prices was recently observed, as a positive response to such efforts and in expectation of an economic recovery. of particular significance is the joint statement released this january, in which the government and the bank clearly set their respective tasks and announced their determination to accomplish those tasks with responsibility. this marks a