this presentation, has contributed to the long - term declining trend in economic growth and mild deflation. to overcome mild deflation, we need to raise economic growth expectations by enhancing productivity growth of the working - age population while increasing the labor participation rates for women and elderly people. however, it may be said that implementation of the necessary structural reforms for boosting growth and productivity has been sluggish – as evident in charts 4 [ 1 ] – [ 4 ] – and the shift in the economic and industrial structure has been limited. issues related to mounting government debt and social security reforms have also generated uncertainty over the future economic outlook. moreover, a series of recent negative shocks, such as the global financial crisis, the european sovereign debt crisis, and the great east japan earthquake, have also worsened this outlook. despite a very accommodative financial environment driven by monetary stimulus measures, these factors have combined to deter expectations of further rises in growth by firms and households. to meet the diverse challenges and establish a new basis for economic growth, japanese firms need to become more innovative and competitive in an effort to add value to their activities and explore new sources of demand, both at home and abroad. the government also needs to support the business community by creating a more business - friendly environment. financial institutions should strive toward strengthening the foundations for economic growth by giving financial support to innovative, viable firms and providing new types of financial and other services, which are increasingly under demand. by promoting longer - term economic growth, moreover, the bank of japan has been helping to sustain the business community indirectly. it introduced a fund - provisioning measure to help reinforce the basis for economic growth ( the so - called growth - supporting funding facility ) in 2010, and it has provided longer - term fixed - rate funds to financial institutions. 3 this facility was expanded in march and april of this year ( chart 20 ). i believe that it is important to stress that the goal of overcoming deflation can be achieved through such continuous, comprehensive efforts by firms, financial institutions, the government, and the bank operating within their respective roles. v. concluding remarks after having suffered from declining fertility rates since the second half of the nineteenth century, european countries, especially the nordic countries, dealt with population ageing issues promptly and acquired considerable know - how and expertise in the process. as a result, european countries enjoy more favorable outcomes and currently manage to maintain higher tfrs than japan : as of 2010, 1. 9 each in finland

and high labor participation ratios for women. second, the 2012 ageing report published by the european commission provides long - term macroeconomic and budgetary projections for the period of 2010 - 60, and it stresses the challenges posed by population ageing. assuming that the tfr in the european union ( eu ) will moderately increase from the current rate of 1. 59 to 1. 64 by 2030 and further to 1. 71 by 2060, and assuming that net migration inflows as a percentage of the total population remain at about 0. 2 percent throughout the 2010 - 60 period, the report projects that the total population will decline only after 2040. however, the size of the working - age population ( aged 15 to 64 years old ) is projected to decline after 2012. the simple fact is that both japan and europe are facing a common structural issue – population ageing. japan is taking the lead with demographic and associated macroeconomic issues. it is widely known that japan has already witnessed a reduction in its the tfr refers to the number of children that would be born to a woman if she were to live to the end of her child - bearing years and bear children in accordance with current age - specific fertility rates. bis central bankers ’ speeches working - age population in absolute numbers since the mid - 1990s. about a decade after this time, the total population declined in 2005 and 2009, and it is projected to decrease constantly from 2011 onward. as a result, japan has become the most progressed ageing society : the share of the population aged 65 and over was 23 percent in 2010 – the highest level in the world. the rapid pace of decreases in the growth rate of the working - age population and total population appears to be unprecedented globally. this has certainly generated various unfavorable impacts on japan ’ s macroeconomic performance, thereby also affecting the environment related to monetary policy management. given that japan and europe face similar phenomena ( i. e., increases in life expectancy and the relative size of their elderly populations ), it is necessary to deepen our understanding of the impact of demographic changes on macroeconomic performance and possibly also about the environment surrounding monetary policy management. however, these issues are not yet being actively debated among central banks around the world. let me outline the sequence of my presentation. it comprises four sections. in part ii, i will briefly examine demographic changes in japan in the post - 1945 period. part iii will focus on the impacts of these changes on macro