s support. the requisite convergence of supervisory practices needs to become a reality very soon. i know that eiopa is making this a priority. incidentally, the three - year review of the european supervisory authorities ( esas ), is underway. following a public consultation proposed by the european commission, the draft legislation looks to strengthen the authorities ’ and chiefly eiopa ’ s role and powers without calling into question the existing architecture. this should support the goal of increased convergence in supervisory practices, which should in turn promote improved effectiveness. accordingly, the proposal represents a positive step forward for europe. however, a close eye should be kept on the place given to national supervisors, especially regarding the question of internal models and supervisory colleges. they should remain within the national supervisors ’ realm of competence, while eiopa ’ s mediation role is essential and should be reinforced, especially with regard to cross - border issues. however, this is incompatible with assuming responsibility for validating national internal models. as for the eiopa role on cross - border cases and its guidance for national supervisors that some member states would favour, such exchanges could take place within dedicated coordination platforms. beyond regulatory adaptation, the challenges ahead relate to technological and environmental changes, which are new and yet crucial matters for attention for insurers, regulators and supervisors. insurance players, of all sizes and risk exposures, are facing the digital revolution, which is inescapable as the developments in other business sectors such as travel, tourism or catering show. to remain competitive in terms of customer relationships, insurers will need to raise their customer experience to the highest levels. this will require them to fundamentally review their processes, tools and information systems. it also calls for an upgrade of their human resources policies. the risks associated with the digital revolution are numerous, but i would like to stress the bigger risk associated with procrastination. this risk seems particularly important to me and it will be an essential focus of attention for supervisors. the digital revolution has other ramifications that require the attention of supervisors. one of them is the increasing inclusion of insurance products within package deals. this is particularly the case for affinity insurance products. these often involve the multiplication of intermediaries in the value chain. this phenomenon can blur responsibilities and the intrinsic economic value of these products, and we are therefore vigilant as consumer protection is especially important in a strengthened european regulatory framework for product governance ( via the insurance distribution directive in particular ). another

funding problems have been observed at resona bank. subsequent developments seem to suggest that uncertainty about the outlook for the japanese economy has become somewhat less pronounced. regarding developments in overseas economies, which have a considerable effect on japan ’ s exports, the uncertainty about the u. s. economy has subsided to some degree, and the sars problem in east asian economies has been coming to an end. against this background, in japan ’ s capital markets, participants ’ pessimism with regard to the economy and prices has decreased slightly, and stock prices have risen considerably. bank stock prices in particular have rebounded significantly. in this situation, long - term interest rates rose after falling to their historic lows of 0. 4 - 0. 5 percent. as mentioned, some positive developments were observed, but there remained various structural problems in the japanese economy. the bank will continue its efforts to conduct monetary policy in a timely manner, monitoring carefully the strength of the recovery in overseas economies, the state of the financial system, and developments in financial and capital markets. the bank is working to strengthen the transmission mechanism to ensure that the effects of monetary easing permeate throughout the economy. as part of its efforts in this regard, the bank has been preparing to commence purchases of asset - backed securities ( abss ) from july 29, 2003. although it is unusual for a central bank to directly take on the credit risk of private debt obligations, the bank considers that, with the weakness of banks ’ financial intermediary function, it is important to encourage the development of the abs market. in formulating the specific details of abs purchases, the bank has paid due attention to contributing to the smooth financing of small and medium - sized firms. with regard to underlying assets, a broad range of assets will be deemed eligible, including receivables, loans, and lease claims. furthermore, the bank has decided to purchase securities with a bb rating or higher. this decision is based on the fact that there have been only a few investors purchasing securities with lower credit ratings, and this has been impeding development of the abs market. the ceiling on the bank ’ s purchases is to be set at 1 trillion yen for the time being. the abs market is expected to become one of the most important financial markets in japan in the future. the bank hopes that the bank ’ s purchase of securities will contribute to the autonomous development of the market. iii. purchases of stocks held by commercial banks the bank started to purchase stocks