. “ public goods ” is the name ascribed to these facilities or services in economics textbooks, and global public goods are those needed for the global economy to function properly. so, what are the global public goods that support the functioning of the global financial system? one obvious but only partial answer is the appropriate regulation and supervision of cross - border financial activities. the great financial crisis has demonstrated that there were many shortcomings in this area, and the international community has taken steps to correct them. good regulation and supervision are important, but by themselves are not sufficient. the soundness of individual financial institutions is one building block of financial stability. in this sense, the international public good supporting global financial padoa - schioppa, tommaso, " markets and government before, during, and after the 2007 – 20xx crisis, " the per jacobsson lecture in basel, switzerland, june 27, 2010. bis central bankers ’ speeches markets is not provided solely by regulators and supervisors. various agents, including but not limited to central banks, ministries, and regulatory boards, work together to realize a stable international financial environment through conducting prudent monetary policy, performing effective regulation of financial actors, and promoting robust market infrastructures. by looking at international financial stability as a public good, we can apply a well - established microeconomic analytical framework to it. a public good is a good that is both non - rivalrous and non - excludable : that is, one ’ s use of a public good does not reduce the availability to others and one cannot effectively prevent the use by others. consequently, two important features of public goods are that they will not be provided if left solely to the market, and that they tend to be consumed excessively when they are provided at all. the latter insight allows us to interpret the great financial crisis as being the consequence of overconsumption of a public good – namely, international financial stability. financial institutions took stability for granted and shouldered excessive risks. this exaggerated the impact when the risks were manifested ; markets could not regain stability by themselves and had to wait for interventions by the public sector, including the coordinated provision of liquidity by central banks. ii. providing global governance in a globalized world in a world where globalization is deepening, and where national financial systems are becoming more interconnected, financial stability must increasingly be achieved at the global level. to make this happen, good governance at the global level is essential. fortunately, nobody is against strengthening

for businesses are likely to support business fixed investment through a decline in capital costs and stronger - than - expected cash flows. furthermore, reflecting past restraints on firms ’ investment attitude, existing equipment has aged and thus potential demand for maintenance and replacement is likely to be strengthened. if the level of economic activity further elevates and the improvement in corporate profits continues, such potential demand becomes more likely to surface cyclically. overseas economies next, i will turn to the outlook for overseas economies. as mentioned earlier, with regard to the outlook for japan ’ s economy, while domestic demand is likely to maintain firmness, external demand is expected to increase, albeit moderately. this is based on the assumption that overseas economies are expected to pick up gradually as financial markets remain generally stable. in its world economic outlook released last month, the international monetary fund ( imf ) projects that the world economy will gradually see an acceleration in its pace of growth from 2. 9 percent in 2013 to 3. 6 percent in 2014, and to 4. 0 percent in 2015 ( chart 7 ). looking at respective regions, the u. s. economy has been recovering moderately on the back of firm private demand under accommodative financial conditions, despite the fiscal drag. the economy is expected to gradually see an acceleration in its pace of recovery, as accommodative financial conditions will be maintained and the fiscal drag will gradually fade. nevertheless, as uncertainty regarding the fiscal problem remains, such as the federal debt ceiling issue, future developments warrant attention. the european economy, which had been receding slowly, has finally bottomed out, and there has recently been movement toward a pick - up. households ’ and firms ’ sentiment are improving as financial markets have remained stable. in addition, changes in the stance of fiscal austerity have been made to some extent and the fiscal drag has weakened somewhat. exports, especially in germany, are bottoming out. although it is necessary to pay attention to the consequence of the european debt problem, as it has not yet been fundamentally resolved, the european economy is expected to gradually pick up on the back of the aforementioned developments. the chinese economy is likely to maintain stable growth at around the current pace, as the government, while progressing with reforms in structural problems such as excess production capacity and excess debt in the manufacturing sector, is expected to carry out various policy measures to underpin economic activity in the event it weakens during the process. meanwhile, growth in other emerging and commodity -