5 0, 0 0, 0 1, 0 1, 0 - 0, 5 - 0, 5 0, 5 0, 5 - 1, 0 - 1, 0 0, 0 0, 0 4 - quarter inflation 1, 5 gdp 0. 5 0. 5 0. 4 0. 0 0. 0 0. 2 0. 2 - 0. 5 - 0. 5 0. 0 0. 0 hours worked 0. 4 0. 4 0. 4 anticipated 0. 2 unanticipated 0. 2 note. all x - axes refer to quarters. 0. 0 0. 0 0. 35 per cent of an estimated potential employment rate of, conservatively, 93 per cent of a labour force of approximately five million is equivalent to over 16 000 jobs. calculating on the basis of 93 per cent thus entails assuming a rather high figure for long - term unemployment of 7 percent. an increase of over 16 000 jobs is thus not very far from the middle of the preliminary range of 10 000 to 25 000 jobs saved that i mentioned at the monetary policy meeting in october. to sum up, a reduction of the repo rate path by 0. 25 percentage points over four quarters will thus give, all else being equal, an increase in inflation of just over 0. 4 percentage points and, if employment varies one - to - one with hours worked, an increase in employment of approximately 0. 35 per cent, which is equivalent to an estimated figure of over 16 000 jobs. we see in figure 3 that the consequences of an unanticipated reduction of the repo rate are less than those of an anticipated reduction. in such a case, hours worked increase by 0. 23 per cent, equivalent to just under 11 000 jobs, when calculated on the same basis. these estimates are unbiased estimates and forecasts of the effects of a lower repo rate path. the actual effect may be larger or smaller. it is possible that the effects of the repo rate on the economy are smaller than normal when the repo rate is close to zero. it is also possible that a reduction of the repo rate path, in a situation in which the market ’ s repo rate expectations remain higher than the repo rate path, can have a larger than normal downwards effect on repo rate expectations, thus increasing the effects on the economy. in the absence of more detailed information on the effect that may be dominant, it does not seem unreasonable to assume

underdevelopment of regional bond markets. it is also often mentioned that the immature local derivatives market makes appropriate risk - taking transactions difficult, as risk - hedging instruments are limited. moreover, owing to less - developed securitization markets in the region, asian economies do not sufficiently enjoy the merits of the securitization schemes that attract a variety of investors depending on their risk - taking capacities ( charts 4 and 5 ). fourth, meanwhile, there are some jurisdictions in asia that rely significantly on so - called micro - finance. micro - finance is indispensable particularly for the sustainable growth of emerging markets and developing economies, and as such has been a main agenda item of the g - 20. however, there is one caveat. the main agents of micro - finance are nonbank financial institutions that, unlike banks, are not tightly supervised by the authorities, but which, like banks, take deposits and provide credit to customers. this means that it could become a risk factor in the financial system, if the market share of loans and deposits by micro - finance agents becomes non - negligible. 2. policy responses by the asian authorities current regional initiatives how have the asian authorities responded to these vulnerabilities? among many, i would like to introduce the following two projects that have been particularly effective in the past ten years. the first is a project aimed at developing liquid bond markets to bridge abundant local savings and local investments. the executives ’ meeting of east asia and pacific central banks, emeap, consisting of eleven central banks and monetary authorities in the region, established the asian bond fund investment trust, and became the initial buyers by investing in sovereign and quasi - sovereign bonds in the eight member jurisdictions. 1 also, as part of when it was launched in 2003, the asian bond fund was limited to investment only in u. s. dollardenominated bonds. however, since 2005, the fund has begun to include those denominated in the local currencies of the eight members, with the aim of raising awareness among private investors. each listed fund bis central bankers ’ speeches the process of asean + 3, the authorities have launched the asian bond markets initiative ( abmi ). under the current initiative, there are four main issues that were raised and have been implemented since 2008, namely i ) the facilitation of demand for local currencydenominated bonds, ii ) the promotion of their issuance, iii ) the improvement of the