cause is deregulation – the decision to put more emphasis on market mechanisms, whether in the move away from planned economies or in the liberalisation of existing market economies. in the financial sector regulators have to find a balance between direct control and allowing the market to find its own equilibrium. the increased emphasis on market mechanisms is in my opinion desirable because of the gains in economic efficiency it can bring. furthermore, it is to some extent inevitable, since the changes in technology have been making regulations increasingly easy to avoid and thus direct control over markets and their participants – albeit still necessary – increasingly hard to maintain. the need for a strategy to make payment systems safer the result of the developments i have just described is a world where markets are more volatile – and where there is more chance that extreme movements in one market will spill over into others. from a regulator ’ s point of view this volatility can be unnerving – so how can we cope? a crucial element is ensuring that the infrastructure is sound. in the financial system the infrastructure is based on three main pillars : the financial institutions, the markets they trade in and, of most interest to this conference, the mechanisms to settle financial transactions in those markets, in other words the payment systems. for the latter pillar adequate procedures of oversight are necessary in order to ensure a well - functioning technical basis. so how do we go about strengthening the payments systems infrastructure to make it more stable? in the light of what i said earlier, i suggest we need a strategy that recognises that the pace of change is extraordinary, ongoing and irreversible. the strategy also needs to take into account the fact that transactions are becoming increasingly complex and interdependent and involve an ever - widening and changing range of participants. this reality has three strategic implications. first, the strategy must be comprehensive across sectors to cope with interdependencies. this means that we should not tackle payment systems in isolation. to be fully effective, the changes to payment systems must be part of a broader plan of reform that also includes not just other settlement mechanisms but also the other two pillars of the financial system, namely financial institutions and financial markets. second, the strategy must be international. it has to recognise that we can no longer safely see payment and settlement system reform as a purely domestic matter. you only have to look at euroclear, cedel, target, s. w. i. f. t., the planned cls bank, visa and master

the cpi is likely to reach close to the price stability target of 2 percent from the latter half of fiscal 2014 through fiscal 2015. while we recognize that lifting inflation expectations through monetary policy is an extremely ambitious approach in unchartered waters, we would like to meet the longstanding challenge of overcoming deflation on all counts by steadily gaining the fruits of pursuing the qqe. concluding remarks in conclusion, i will touch on the economies of shimane prefecture and the san - in region. shimane prefecture seized the historical watersheds of “ 1300 years of the kojiki – japan ’ s oldest chronicle ” in 2012 and “ izumo taisha ’ s sengu – a period of massive repair work – of the heisei period ” in 2013 as golden opportunities, and has been making efforts all over the prefecture to establish a sightseeing brand. its aggressive pr activities are also seen in the metropolitan area. together with the recent boom in visitors to spiritual places and the opening of the matsue expressway, tourism demand has been increasing to a substantial degree. according to the bank ’ s matsue branch, the economic effect of an increase in tourism demand in 2013 stemming mainly from izumo taisha ’ s sengu was estimated to be slightly less than 30 billion yen. given that shimane ’ s gross prefectural production is slightly more than two trillion yen, the increase in tourism demand will be a substantial boost for the regional economy, for which the average growth rate over the past 10 years has been about zero percent. in addition to firm tourism, business conditions in the non - manufacturing sector, including the construction industry, which has been underpinned by an increase in public and private bis central bankers ’ speeches construction, have been generally improving. business conditions have also been improving in the manufacturing sector due mainly to strong production in electronic parts for smartphones and tablet computers as well as automobile - related goods, and increased production in food & beverages and construction - related materials, reflecting an increase in domestic demand such as tourism and public investment. as a result, the economy of shimane prefecture has been moderately recovering. according to the recently released september tankan survey, business conditions in the san - in region reached the highest level since 1991, confirming that economic recovery has been spreading. the business conditions have been at almost the same level compared with those nationwide. during japan ’ s longest post - war economic recovery, between 2002 and 2007, an improvement in business conditions in