way that this central body becomes the nerve centre of the ips. the second pillar comprises the mutual liquidity and solvency pacts between the participating savings banks and the pooling of results, to extents that should exceed 40 %. and the third pillar is a commitment to stability of the agreements, which must run for a minimum term of 10 years, and which cannot be broken without the banco de espana first analysing the viability of the various institutions resulting from the fragmentation process. it should be stressed that, in all cases, the agreements so far reached go further than these minimum legal requirements, in the extent of pooling of solvency, liquidity and results. this is because, if so approved by the general meetings convened for next week, the extent of pooling will reach 100 %. this solidarity arrangement contributes to providing firm foundations for a common project and giving it substance, since objectives are unified, more efficient management arrangements are set in place and the markets and all intervening agents can more readily perceive the project ’ s cohesiveness and viability. from the standpoint of banking regulation, by using this design ipss become consolidatable groups of credit institutions dominated by a central body. actually, however, they are more than a group ; they are de facto mergers ( “ cold mergers ” as they have been called ) since, for economic – not legal – purposes, each participant has forgone the individuality proper to a separate legal person. full mutual liability between the parties to the agreement has been achieved, going beyond what the law governing corporate groups provides for in spain. hence, in practice, the participating savings banks become, from a merely economic and managerial standpoint, what are veritable retail banking “ regional heads ” of the ips regarding their operational capacity and the way in which they contribute solvency, liquidity and results to the group ; yet, from the legal standpoint, they retain their personality and their sovereignty in the agreed distribution of welfare fund assets. i also pointed out how, like any new product, ipss must pass muster in respect of the third and most important step of the evaluation process, namely the “ use test ”, i. e. proof of their adaptation to reality. ipss have to obtain the same improvements in organisation, efficiency, economies of scope, diversification and quality and unity of management as traditional mergers. they must do so in the same length of time as a normal merger, and they must strive

economies ( slide 5 ). the japanese economy has recovered at the fastest pace among the advanced economies, and one of the main reasons for this has been the significant increase in exports to asia. now, what projections can we make about future global economic developments? while the future of the global economy is fraught with uncertainty, i focus particularly on the following three points in making a projection. the first point relates to the advanced economies, especially to an assessment of their balance sheet adjustments. the credit bubbles in the mid - 2000s were on a very large scale, particularly in the u. s. and the u. k. economies, and for that reason, it may well take some time for them to recover. assessment of the effectiveness of macroeconomic policies in advanced economies is also an important element. there is already very limited room for deployment of monetary and fiscal policy in these economies. given these circumstances, when can we expect the advanced economies to return to a full - fledged recovery path, and how robust will this return be? the second point i wish to raise relates to the growth prospects for the emerging economies. the growth potential of emerging economies may seem very large, but without the appropriate policy taken, the risk of a bubble cannot be ruled out. in addition, although this is not a pressing concern, the smooth transition from a high - growth economy to a mature economy will become one of the important policy challenges for the emerging economies in the longer term. the third point, which interlinks with the above two points, is the issue of capital flows and exchange rates, or more simply, the currency conflict under the “ two - speed recovery. ” iii. perspectives from the experience of the japanese economy japan ’ s experience over the past few decades offers a range of ideas when considering these three points. one of the most debated topics of economic policy over the past several months has been the large - scale asset purchase program implemented by the federal imf “ world economic outlook, ” october 2010. asian emerging economies are here defined as china, india, korea, taiwan poc, hong kong sar, singapore, thailand, indonesia, malaysia, philippines, and vietnam. reserve. meanwhile, many commentaries by economists and policy makers suggest that the program was intended to avoid “ japanese - style deflation ” or “ the lost decade in japan. ” incidentally, if you search the keyword “ japanese - style deflation ” on google, the results have increased rapidly from about four hundred thousand entries during the