ratio has actually been falling since the turn of the century just as the coverage ratio has been rising. for universal and commercial banks, our latest number is an npl ratio of 2. 06 % and a coverage ratio of 135 %. all of these metrics converge into the capital adequacy ratio which is the central, though not exclusive, metric under the basel accord. the often - cited statistic is that our banks have consistently maintained, on average, capital ratios well above the regulatory thresholds. on a consolidated basis, system car is hovering at 17 %, of which 14 percentage points pertain to the tier 1 ratio. most will leave the system review to the measures that i just shared. however, it is important for the bsp to make a point about access to the banking market because financial inclusion is much more than just a buzz word to us. today, we have a wider reach not only from the significant increase in physical banking officers ( which surged from 21, 394 at end 2007 to 26, 057 at end 2011 ) but also through atms ( which grew from 7, 155 to 10, 659 over the same period ) and the active use of technology through our mobile banking framework. indeed, it can be said that we now have a wider footprint of banking services that caters to the needs of our differentiated public. ladies and gentlemen, all of these positive developments neither happened overnight nor happened on their own. we believe that they reflect the enabling environment which we have invested in with the active support of and coordination with market stakeholders. while we bis central bankers ’ speeches can itemize each and every circular and policy prescription we have issued, i believe that we can categorize them into six main areas. • i would start with governance. this is most critical because without these overarching guidelines, the conflicts of interest inherent in finance would prove to be untenable. • risk management comes to mind next because of our deliberate shift from transactions review to a risk - based supervisory framework. • microfinance and financial inclusion are advocacies which we have pursued well before it became popular to do so. • to complement the prudential framework, there needed to be improvements in the delivery of banking services. • we certainly could not and would not neglect contributing to the development of the capital market. • as the other facets involved direct improvements of market components, we have not forgotten the needs of the banking public either for redress mechanisms or

haruhiko kuroda : quantitative and qualitative monetary easing remarks by mr haruhiko kuroda, governor of the bank of japan, at the international council meeting of the bretton woods committee, washington dc, 10 october 2013. * * * introduction it is my honor to take part in this wonderful meeting as a panelist today. when i first looked at the list of questions prepared by the committee to shape my remarks, i was stunned by the sheer number and scope of the questions. this points to the fact that we are surrounded by daunting challenges in this interconnected world, and it is our responsibility to sincerely meet those challenges. given the time constraints today, my focus will naturally be on monetary policy. the steering of policy has become increasingly difficult in recent times, and many of my fellow central bankers have found themselves in uncharted waters. since the outbreak of the lehman crisis, major central banks around the globe have introduced unconventional monetary policy measures, including asset purchases, amid the constraints of a zero lower bound for nominal interest rates. the bank of japan has also implemented unconventional monetary policy several times, since more than a decade ago, and has successfully accumulated ample experience. however, we have not been successful in overcoming deflation. to this end, in april, immediately after i became the governor of the boj, we introduced quantitative and qualitative monetary easing, dubbed the qqe. the qqe is markedly different from the policies the boj implemented in the past and from unconventional monetary policies other central banks have been carrying out. today, in the time allotted to me, i would like to explain the uniqueness of the qqe. challenges and economic situation japan ’ s economy has been mired in deflation for the past 15 years. in the meantime, people ’ s inflation expectations declined and the recognition that prices will not increase – namely, deflationary expectations – became entrenched. amid the situation of prices not increasing, the holding of cash or deposits became a better investment, and thus firms and households hoarded cash and did not make other productive investments. persistent deflation encouraged behavior to stay status quo, and this deprived japan ’ s economy of vitality. there were phases of economic recovery in the meantime, but they did not lead to a sustainable increase in prices. the phillips curve, which shows the relationship between the output gap and inflation, shifted downward in tandem with a decline in inflation expectations. the average inflation rate