##quisite condition for each country to achieve sustainable growth, but not a sufficient condition. in formulating macroeconomic policy, the traditional emphasis was to ensure domestic stability or to put one ’ s house in order. however, the simple sum of each country ’ s policy actions may not necessarily achieve an optimal outcome at the global level. although policy - makers in each country may be acting rationally from its own individual perspective, collectively there is the risk of a fallacy of composition. currently, many central banks in advanced economies have entered the realm of unconventional monetary policy such as the purchase of various types of assets to spur growth and to buy time as the sectors of the economy go through balance - sheet repairs. however, as the domestic monetary transmission mechanism is constrained, there may also be unintentional cross - border spillover effects, such as increases in capital inflows to other countries. the effects could also feedback to the originating country. meanwhile, central banks in emerging economies have also shifted toward monetary accommodation or relaxed recent tightening moves. these steps are necessary to support growth. but what this global monetary accommodation ultimately means for global bis central bankers ’ speeches commodity prices and inflationary pressures, and as a result to global macro - economic stability, is something that will likely require close monitoring. another dimension would be the tendency to focus on external demand to spur domestic growth. this is a natural reaction when domestic demand is fragile. when the global economy as a whole is growing rapidly this would not be an issue, but when global growth is weak, this could mean taking away possible opportunities from other economies. if rapidly growing emerging economies were to succumb to the temptation to resist the appreciation of one ’ s currency, this could be counterproductive from a global perspective. the third lesson is that although measures taken by central banks, both individually and collectively, have been successful in stabilizing the economy and the financial system during the crisis, policy - makers, including central banks, cannot be complacent. for example, the ecb ’ s omt has significantly taken away tail risks in the euro zone. this respite is probably, nonetheless, only temporary and this opportunity must be used to fundamentally resolve the root causes of the crisis within the euro area. another example would be the central bank swap lines which were introduced during the height of the crisis after the collapse of lehman brothers and still function as a backstop to maintain stability in global interbank markets. the swap lines substantially reduced stress

masaaki shirakawa : lessons from the global financial crisis – asian and global perspectives remarks by mr masaaki shirakawa, governor of the bank of japan, at the international council meeting of the bretton woods committee, tokyo, 13 october 2012. * * * it is an honor to be a part of this esteemed panel. with the hope of stimulating further debate, i would like to discuss three lessons from the global financial crisis and the resulting challenges they present. first, in this globally interconnected world, nothing is purely regional anymore. a global perspective is crucial. when the euro area crisis was initially brewing a couple of years back, there was reluctance from our european colleagues to discuss it as an issue with global implications. the euro area economy was recovering and it was argued that the current account of the euro area as a whole was balanced and that intra - area imbalances were manageable. it was presented as a regional problem with regional solutions. we all know now that this was not the case. the euro area crisis has impacted global growth through both trade and financial channels, probably in a much larger way than initially expected. resolving the euro area crisis has become a key agenda item for the g20, and the imf is playing a key role together with the euro area core countries towards its resolution. to give another example, when economic growth decelerated in the advanced economies last year, there was hope that the emerging economies, especially those in the asia would pick up the slack. asian economies provided approximately 40 % of global growth in 2011 and their share in global exports was more than 30 % in 2011. this, however, did not mean they were immune from the slowdown of the european economy. weakness in europe has impacted chinese exports, and through the regional supply chain, exports and growth have been impacted broadly throughout asia. the imf, in its regional economic outlook published yesterday, points out that two - thirds of emerging asia ’ s exports are linked to demand from europe and the united states, and fund has reduced its growth outlook for asia in 2012 from 6. 0 % to 5. 4 %, and that of 2013 from 6. 5 % to 5. 9 % respectively. they have also noted that this estimate is based on the premise that conditions in europe improve gradually and that the fiscal cliff in the united states will be avoided. considerable downside risks remain. the second lesson is that putting one ’ s house in order is an essential prere