to note that the coupon rate was reduced from 6 % for the first two issues to 4. 5 % for the rest. the rate of the third and fourth issues was lowered because this small and underdeveloped country in the far east had won some battles against all the odds. what was the significance of opening the london office? it represented our commitment to never betray trust given us by the market. i am pleased to emphasize that history shows the impeccable record of honoring the national debt and fulfilling our commitment. the role of managing the national debt is nowadays no longer deemed a major function of our bank or central banks in industrial countries. our principal objective today is to maintain price stability and financial stability. yet, we find there is a timeless and shared element in the evolving objectives of the central bank between now and then. honoring debt repayment and maintaining price stability both point to one thing in common. it is “ trust in the currency. ” it has never changed as one of the ultimate objectives of the central bank. when we review the past century, we are again impressed by the depth of the london market and the dynamism of market initiatives here. the successful flotation of japanese government bonds in 1904 epitomizes such characteristics of the london market. we also find, over the century, numerous cases in which japanese banks and businesses benefited from their participation in the london market. in the area of intellectual thinking and its applications, we have been quite often inspired by the monetary authorities in the uk in general and the bank of england in particular. we highly appreciate the close cooperation and the constant exchanges of views between us. the bank of japan has not been a mere beneficiary. it has also contributed somewhat to nurturing the london market and maintaining its stability. several months ago, senior officials at the bank of england kindly reminded us of two major examples amongst others. the first one is, curiously enough, that the bank of japan was instrumental in the development of london ’ s money market at the beginning of the twentieth century. upon the request of the bank of england, the bank of japan utilized a large pool of funds from the japanese government bond issuance for the purpose of the better functioning of the money market in london. let me give you a rough idea of how large the proceeds of japanese government bond issuance. the total amount was more than double the amount of the gold reserves of the bank of england. the second example is the scheme for credit facility

credit, with the assistance provided under strict conditionality and on the basis of a strict analysis – conducted by the european commission and the imf, in liaison with the ecb – of the sustainability of the relevant country ’ s debts. the establishment of the esm represents an important addition to the institutional fabric of emu. however, the existence of a mechanism to provide financial assistance to countries facing temporary distress should not be seen as a source of moral hazard. such risks are prevented both by the strict conditions under which any assistance would be provided and by the fact that the mechanism will be activated only if deemed indispensable in order to counter threats to the financial stability of the euro area as a whole. in addition, the establishment of this permanent stabilisation mechanism will be accompanied by the strengthening of the framework for economic governance in the euro area, particularly as regards the framework for the multilateral vigilance of national policies in the areas of public finances and competitiveness. bis central bankers ’ speeches iii. ( d ) improving economic governance it is fair to say that the experience of the economic and monetary union ( emu ) over its first twelve years has been a historic success. at the same time, it is also fair to say that the credit should go, to a very large extent, to the achievements of the monetary pillar of monetary union ( the “ m ” in emu ) rather than of its economic pillar ( emu ’ s “ e ” ). yet, monetary policy alone cannot deliver all the benefits of emu. the economic pillar must also play its part. unfortunately, this has not always been the case so far. indeed, national governments have not been sufficiently committed to fulfilling their obligation to guarantee macroeconomic stability and fiscal sustainability in the long term. therefore, a key lesson learnt from the crisis is that in order to fully reap the benefits of emu, it is essential to strengthen the rules that govern macroeconomic policies in the euro area so as to ensure their alignment with ( 1 ) sound economic principles ( such as fiscal discipline and a commitment to a market - based economic system ) that foster macroeconomic and financial stability, and ( 2 ) with the needs of the single currency. some concrete legal initiatives in these areas have been proposed by the european commission, on the basis of the final report of the task force chaired by the president of the eu council herman van rompuy. in a nutshell, the european commission recommends strengthening the stability and growth pact