i have mentioned already, bank credit to the asian countries expanded significantly in the years preceding the crisis. during the same period from 1990 to 1996, the share of credit maturing in less than one year has increased by more than 10 percentage points, from 52 per cent to 63 per cent. short term extensions of credit do not cause problems if they are rolled over. however, when the borrower can no longer roll over its debt, and funds begin to flow outwards, the borrower quickly faces severe liquidity problems. the asian crises showed us that the disruptions in the economies and financial markets in these circumstances could be very serious. in a number of cases, they could be far more serious than adjustments that would have been warranted to correct the macroeconomic imbalances that existed before the crisis. in this context, while the merits of capital inflows should also be fully recognized, the volatility of short term capital flows is an important issue in dealing with international financial crises. international contagion of crises my third observation is that there seems to be more international transmission of financial crises. for example, when the latin american debt problem deepened in the 1980s, effects on other continents were muted and asia did not suffer serious financial crises. the situation was similar during the mexican crisis of 1994 – 95. however, in the most recent financial crisis beginning in 1997, the wave of disruptions reached many emerging market economies, sometimes quickly, and in other cases slowly. the transmission mechanism was not singular : rapid declines in credit extensions to the region by developed countries were significant in some cases, whereas in others it was the proxy hedge ( i. e. hedging by selling other currencies with similar risk characteristics ) or purely psychological transmissions of bearish sentiments. it might be said that the crisis that began in asia swept around the world to end, seemingly, upon reaching brazil. in the past, we have seen contagion of financial crisis within a region where there are significant interactions in terms of trade and investment flows and / or the economic structure is similar. contagion to other regions of the globe is a new phenomenon not observed in the 1970s or 1980s. more diverse manifestation of crises finally, i should point out that financial crises are now manifesting themselves in diverse ways. a classic financial crisis is when the financial system is strained by funding problems, for example when bank after bank is hit by depositor runs. of course, in the most recent crisis involving the emerging

##rate the need for improved financial literacy is gradually taking hold in japan. in the council ’ s survey, we ask about the “ purpose of holding financial assets. ” the reply chosen most often had long been “ preparation for illness and unexpected emergency. ” but in 2013, this changed for the first time in its 60 - year history to “ funds for life during my retirement period. ” this is symbolic for japan, which has a well - developed public pension system. bis central bankers ’ speeches the financial behavior of japanese people has changed accordingly. households ’ financial assets1 have increased by around 20 percent over the last decade ; that is, the period before and after the global financial crisis. notably, the amount held by people aged 60 years and older has reached 25 million yen per household. this is almost the same level as the “ target amount of funds you regard as necessary ” in the survey. financial assets are being accumulated to ensure a stable living standard over an individual ’ s retirement period. however, there are worrisome signs that financial literacy associated with lifetime planning has been undermined. as i mentioned earlier, households ’ financial assets have been growing. however, at the same time, the number of households that do not have such assets has been increasing recently. this trend has been observed in a wide range of income groups, including the highincome group. the backgrounds to this are varied, and problems related to financial literacy represent one of the factors. one example is a weaker awareness of the importance of lifetime planning. there are various concerns regarding children as well. in this affluent society that is undergoing demographic changes and rapid progress in technology, children could lose their sense of the value of money. for example, we have the so - called “ six pocket problem. ” this refers to a phenomenon in which a child is indulged with money given by the parents and grandparents of both the father and mother. another is the “ invisible money problem ” ; that is, a situation in which a child does not feel that they actually paid a price for something, given the increasing use of electronic money. in both cases, children have fewer opportunities to realize, through the first - hand experience of using physical money, that there are limits to the money we can spend. we must keep up with these developments, as lifestyles and values have become diverse and everyday life is more dependent on and convenient with technology. however, we still need to understand that there are limits to the goods we can own