fig. 1. 1 ). the economically troubled countries of the eurozone have a similar pattern to japan and the united states. the ratios for greece, portugal and spain have almost the same time profile, and all of them peaked around 2000 – 2005. the peak of the spanish property boom was just after the ratio ’ s peak, and the financial problems of greece also started at the same time. a particularly interesting case is ireland, which showed a sharp rise in the ratio until around 2005. the bust of the country ’ s property market bubble was just a few years around the corner ( fig. 1. 2 ). incidentally, for the sake of completeness, i have included the figures for china ( fig. 1. 3 ), whose ratio seems still to be rising rapidly, but will peak a bit later than in euro - american countries. the peak will be around 2010 – 15, after which it will go down as rapidly as it is now going up. the inverse dependency ratios of many other asian countries have a quite similar time profile to that of china. i am not suggesting any causality here, but simply pointing out the balance sheet adjustments after the bubble burst in japan, united states and the eurozone, whether private bis central bankers ’ speeches or public, must be carried out as the population is ageing. i believe this fact has an important bearing on the future of monetary policy, especially unconventional monetary policy. in section 2, i first examine the process of balance sheet adjustment after the bursting of a bubble and when the population is ageing, juxtaposing japan in the 1990s and the united states in the 2000s. then, in section 3, i summarize the consequences of severe, prolonged balance sheet adjustment, as seen in japan in the 2000s. finally in section 4, i identify the multi - faceted challenges central banks may face as a consequence of carrying out balance sheet adjustments under population ageing, and i explain the bank of japan ’ s policies to tackle these problems. 2. balance sheet adjustment and the breakdown of the transmission mechanism who leveraged during the bubble period? japan and the united sates in order to find out the effect of balance sheet adjustments after the bursting of a bubble, let me first clarify who leveraged during the bubble periods. in japan, it was the corporate sector, especially small to medium - sized firms, which for the first time gained access to large banks after the so - called financial liberalization ( fig. 2

developments in overseas economic activity and prices ; developments in the situation surrounding ukraine and in commodity prices ; and the course of covid - 19 at home and abroad and its impact. in this situation, it is necessary to pay due attention to developments in financial and foreign exchange markets and their impact on japan's economic activity and prices. meanwhile, japan's 1 / 2 bis - central bankers'speeches financial system has maintained stability on the whole. although attention is warranted on, for example, the impact of the tightening of global financial conditions, the financial system is likely to remain highly robust on the whole, mainly because financial institutions have sufficient capital bases. regarding financial risks from a longer - term perspective, while there is a possibility that prolonged downward pressure on financial institutions'profits may lead to a gradual pullback in financial intermediation, the vulnerability of the financial system could increase, mainly due to the search for yield behavior. although these risks are judged as not significant at this point, it is necessary to pay close attention to future developments. ii. conduct of monetary policy next, i will explain the bank's conduct of monetary policy. japan's economy is on its way to recovery from a downturn caused by covid - 19 and uncertainties for the economy have been extremely high. on the price front, the year - on - year rate of increase in the cpi is projected to decelerate to a level below 2 percent from fiscal 2023. given such developments in economic activity and prices, the bank will continue with monetary easing, aiming to firmly support japan's economy and thereby achieve the price stability target of 2 percent in a sustainable and stable manner, accompanied by wage increases. thank you. 2 / 2 bis - central bankers'speeches