banks : restoring market function and confidence, ” remarks at the panel session “ monetary policy boundaries : alternative instruments and policy coordination ” at the money and banking conference sponsored by the central bank of argentina on sept. 1, 2009, available online at http : / / www. boj. or. jp / en / type / press / koen07 / ko0909a. pdf. if a decision maker ’ s confidence is “ contaminated ” or eroded in the sense that he / she thinks, though with a small probability ( say ε ), that he / she is ignorant about the situation he / she faces, his / her rational behavior can be described as “ maximin ” optimization. in the maximin optimization, he / she is particularly sensitive to the worst - case scenario. see, nishimura, k. g., and h. ozaki ( 2006 ), “ an axiomatic approach to εcontamination, ” economic theory, vol. 27 ( 2 ), pp. 333 - 340. also, the fed expanded swap lines with other central banks to enable other central banks to provide further dollar liquidity. a significantly longer duration of liquidity - provision operations helped to substantially reduce financial institutions ’ fear over procuring longer - term liquidity. the expansion of counterparties and collateral eligibility secured them new no - risk funding sources, that is, central banks, to partly alleviate a lingering fear of counterparty risks in money markets. i think no additional words are needed about their put - option characteristics of the asset purchase programs. looking ahead : no free umbrella against plain old rain clearly, central banks ’ provision of catastrophe insurance measures has worked quite well, together with various governmental measures of similar characteristics. 4 immediate dangers have subsided, though we are still facing a possibly bumpy adjustment process after the collapse of the “ credit bubble ”. in order to look ahead, the following two points should be kept in mind. first, these catastrophe - insurance measures are in fact “ free ” insurance. beneficiaries of these measures do not pay fair, or, in many cases, any premium for these hedges. rather, central banks and governments implemented these measures against the “ unusual and exigent ” circumstances of contagious confidence erosion. thus, the measures were to be temporary. a permanent provision of such free put - like options obviously distorts the market mechanism and prompts undesirable risk taking or “ moral hazard. ” to

toshiro muto : the 50 - year - long good relationship between hong kong and the bank of japan speech by mr toshiro muto, deputy governor of the bank of japan, at the reception for the 50th anniversary of the bank of japan representative office in hong kong, hong kong, 24 september 2007. * * * good evening. distinguished guests, chief executive of the hong kong monetary authority mr. yam, consul - general and ambassador mr. sato, ladies and gentlemen, on behalf of the bank of japan, let me extend our gratitude to all of you for our long - standing friendship and your cooperation with our hong kong office. in 2004, i was invited to join the visitors programme sponsored by the government of hong kong, and enjoyed a candid exchange of views with senior officials in the government. the bird's - eye view of hong kong's dynamic economic activities which i saw from a helicopter is really unforgettable. since then, i have felt deeply attached to this great city. by coincidence, this year is also the 10th anniversary of hong kong's handover to china. it is my great honor to visit hong kong again today, and hold our 50th anniversary reception, celebrating hong kong's closer economic ties with the mainland and its prosperity as an international financial centre. pioneer days of the hong kong office there is an interesting story behind the establishment of the hong kong office. in 1953, four years before the opening of the hong kong office, the bank planned to open an office in calcutta, india. at that time, the indian city was important for japan as a source of iron ore and cotton. unfortunately, however, two senior bank staff sent to calcutta became ill, probably due to the difference in climate between india and japan. hence, the bank gave up the plan. after this incident, hong kong was chosen as the location for the bank's first representative office in asia. at the time, hong kong was already the information hub in asia, including china, owing to its trading and financial expertise. in retrospect, the decision was appropriate, given hong kong's current prosperity as a leading financial centre in asia and oceania. however, the new - born hong kong office faced adverse winds in the early stages. until the early 1970's, due to lack of diplomatic relationship between china and japan, staff in the office were not even allowed to have official contacts with banks with mainland origins, let alone to visit the mainland