masaaki shirakawa : one month after the great east japan earthquake – critical role of financial infrastructure opening remarks by mr masaaki shirakawa, governor of the bank of japan, at a meeting hosted by the institute of regulation & risk, north asia, tokyo, 11 april 2011. * i. * * introduction i am honored to have been invited today to this meeting hosted by the institute of regulation & risk, north asia. it is now exactly one month since the march 11 earthquake. i would like to express my sincere condolences to the victims of the disaster and offer my heartfelt sympathies to those who are suffering. i am pleased to see many friends in attendance today, and my gratitude especially goes to bill dudley, president of the federal reserve bank of new york, who is here despite these difficult times after the disaster triggered by the earthquake. i am told that the meeting focuses on financial regulation and supervision. the earthquake, which had a magnitude of 9. 0 and was the largest on record in japan, the tsunami, and the nuclear plant problems were a series of events that have raised many risk issues that go beyond the level of risk management by financial institutions. for that reason, it is critical to reconsider how society as a whole copes with such issues. of course, it would be premature to attempt to provide comprehensive answers at this juncture, but one of the important aspects in this regard is the robustness of social infrastructures. in what follows, from such a perspective, i would like to make a modest contribution by sharing with you what has happened in terms of financial infrastructure, which is one of the critical social infrastructures, in the past month and my impressions over this period. ii. impact on financial infrastructure let me first talk about how the disaster affected japan ’ s financial infrastructure. the physical damage to financial institutions in the areas hit by the earthquake was enormous, including the destruction and flooding of some branches. thanks to the dedicated efforts of those involved, financial institutions have been gradually starting to get their branches and offices in those areas back on their feet. there are 72 financial institutions with headquarters in one of the six prefectures of the tohoku region or ibaraki prefecture. of the 2, 700 branches and offices of these financial institutions, those closed as of march 16 were about 310, or about 10 percent of the total, but as of today this has declined to about 150, or about 6 percent of the total

bojan markovic : fx volatility and market stability speech by mr bojan markovic, vice governor of the national bank of serbia, at the annual aci conference, zlatibor, 17 september 2011. * * * ladies and gentlemen, a year ago, i was standing here in front of the very much the same audience, expounding on the benefits of exchange rate flexibility. i argued that exchange rate flexibility is a necessary backbone of stable and low inflation, and as such it must stay with us in the foreseeable future. i reasoned that movements in the exchange rate absorb shocks that otherwise would have gone to inflation or output and applauded the role the flexible exchange rate played in sheltering our economy from the impacts of the crisis. at the same time, however, i called for a greater use of hedging instruments and sheltering the financially less literate sectors of our society from unwarranted exchange rate exposure. the way forward, i argued, is not through limiting exchange rate volatility, but rather through expanding on the use of dinar based and hedging instruments. accordingly, monetary policy based on a flexible exchange rate has become a cornerstone of our efforts to increase the use of dinars in the economy. a year on, some of the effects of exchange rate volatility are already visible. the daily exchange rate has certainly become more volatile. according to some measures1, the daily volatility increased threefold in the past year, although it still remains lower compared to, for instance, volatility in similar countries with flexible exchange rate, such as poland, hungary or romania. and we expect that to remain the case in the period ahead. chart 1. nbs interventions and short - term fx volatility nbs interventions ( rhs ) st. dev. ( eur m ) 30 - days moving average ( lhs ) 0. 008 egarch ( lhs ) 0. 007 0. 006 0. 005 0. 004 0. 003 - 20 0. 002 - 40 0. 001 - 60 0. 000 - 80 jun jul avg sep oct nov dec jan feb mar apr may jun jul charts 1 and 2 report 30 - days moving average and egarch measures of daily volatility. bis central bankers ’ speeches the increase in exchange rate volatility was taking place against a declining presence of the national bank of serbia ( nbs ) in