they move in a less volatile manner. as a result of smooth economic adjustments in the early 1980s after the second oil crisis, japan's economy followed a higher trend growth path than the u. s. economy while it moved in a less volatile manner thereafter. this situation, however, was reversed after the bursting of the asset price bubble in the early 1990s, and japan's economy experienced a decline in the trend growth path while moving in a volatile manner. japan's economy is now emerging from the prolonged stagnation that was an aftermath of the bursting of the asset price bubble, and is heading toward a sustainable growth path under price stability. in order to ensure this development, it is important, through the appropriate conduct of monetary policy, to minimize the volatility of business cycles and maintain a stable economic environment. viii. conduct of monetary policy before concluding my speech today, i will talk about the bank's conduct of monetary policy based on the assessment of economic activity and prices mentioned so far. the bank has been reducing the outstanding balance of current accounts at the bank by paying due attention to the stability of the money market under the guideline for money market operations that encourages the uncollateralized overnight call rate to remain at effectively zero percent. through this process, the uncollateralized overnight call rate has been stable at around zero percent, despite small temporary increases. in the call market, interest rates have shown some fluctuations reflecting market conditions and the volume of transactions has been gradually increasing. under these circumstances, the bank no longer finds it difficult to control the uncollateralized overnight call rate in its day - to - day operations. in this sense, the reduction of the outstanding balance of current accounts has virtually been completed. with regard to the future course of monetary policy, the bank will conduct monetary policy in line with the thinking described in the outlook report as long as developments in economic activity and prices follow the bank's projection presented also in the outlook report. in other words, it seems probable that the accommodative financial conditions ensuing from very low interest rates will be maintained for some time following a period in which the uncollateralized overnight call rate is at effectively zero percent. through and beyond this stage, the bank will adjust the level of interest rates gradually in the light of developments in economic activity and prices. the timing of a policy change depends on developments in economic activity and prices from this time on, and there is no prede

haruhiko kuroda : recent developments in japan ’ s economy, and observations on the european situation given japan ’ s experience during the 1990s financial crisis remarks by mr haruhiko kuroda, governor of the bank of japan, at the paris europlace financial forum, tokyo, 25 november 2013. * * * introduction i am honored to have this opportunity to speak before the paris europlace financial forum today. in the following few minutes, after briefly touching on the recent developments in japan ’ s economy, i would like to go over what we can say about the european authorities ’ various initiatives from our experience of japan ’ s financial crisis in the 1990s, bearing in mind the recent european situation. the developments in japan ’ s economy and prices i would like to start off with the recent developments in japan ’ s economic activity and prices. the bank of japan introduced quantitative and qualitative monetary easing ( qqe ) in april this year with a view to bringing japan ’ s economy out of deflation, which has lasted for nearly 15 years. in the subsequent eight months, the bank has been steadily pursuing this policy. positive developments have been spreading in financial markets and the real economy, as well as in people ’ s mindset and expectations. the qqe has steadily been exerting its intended effects. japan ’ s economy is recovering moderately, with a positive spillover from income to expenditure in the household and corporate sectors taking course. looking ahead, a virtuous circle among production, income, and spending is expected to continue, and japan ’ s economy is projected to grow, as a trend, at a pace above its potential. on the price front, the year - on - year rate of increase in the consumer price index ( cpi ) for all items less fresh food has recently been accelerating to a range between 0. 5 and 1. 0 percent. with the prospect of an improvement in the aggregate supply and demand balance and a rise in medium - to long - term inflation expectations, the year - on - year rate of change in the cpi is likely to follow a rising trend. therefore, japan ’ s economy has been following a path toward achieving the 2 percent price stability target as expected. european situation now, let me briefly refer to the european situation. while details will be provided by governor noyer, our recognition is that the european economy is bottoming out and there are signs of a pick - up. as a recovery in the european economy is