only on interest rates runs the risk of making a mistake regarding the degree of monetary easing and tightening. under such circumstances, it is better to conduct monetary operations guided by quantitative targets such as money supply. conversely, in an economy where demand for money greatly fluctuates, setting a quantitative target becomes rather dangerous. until the latter half of last year, the monetary base, which is the sum of currency in circulation and reserve deposits, had exhibited a high growth rate of about 10 percent on a year - on - year basis. this was because, against the background of anxiety regarding financial system instability, the financial, household, and corporate sectors held a huge amount of liquidity either in the form of cash or deposits with the bank of japan. if the bank had adopted quantitative targeting under such a situation, it would have meant a tightening of monetary policy which would have been contrary to its policy stance. there are many other issues to be examined such as the relationship between quantitative indicators and the real economy, the bank ’ s controllability of such indicators, and the effect of targeting on financial system stability. these issues have been taken up for active discussion by the policy board. one board member even made a specific proposal for quantitative targeting. however, the majority opinion of the policy board to date is that it is more appropriate to effect monetary easing by using interest rates as an operational target rather than setting quantitative targets. b. zero interest rate policy and inflation targeting the bank of japan law explicitly stipulates that monetary policy aims at price stability. hence from the viewpoint of pursuing price stability, there would be no conflict between our current conduct of monetary policy and inflation targeting. the difference boils down to whether or not to set a specific numerical target such as a 1 percent increase in cpi. since the central bank aims at price stability over the medium to long term, it needs to make a manifold analysis of various factors affecting price developments, such as the risk of future price changes, to come to a judgment. it is dangerous to stick to a specific figure for a specific price indicator as a target. for example, even if a specific target were set, it does not necessarily follow that a policy response would not be required until the actual price index exceeded the target. depending on the speed of price changes and tightness of supply and demand conditions, there might be a situation where an appropriate policy response would be called for before the price index reached the target. the currently prevailing argument for inflation targeting includes dissi

example is the bank's decision to start publishing statistics on syndicated loans from december 2003, in response to earnest requests from market participants. the bank has also conducted quantitative and theoretical research using a variety of data to capture movements in financial markets and at financial services providers, and has sought to share professional views with market participants by publishing the results of its analyses. second, the bank has been enhancing the settlement infrastructure for financial markets. the bank started online operation of its funds transfer system in 1988, and of the transfer system for japanese government securities ( jgs ) in 1990. as for cp, corporate bonds, and stocks, the bank has cooperated with private - sector settlement systems to introduce online settlements as well as simultaneous settlements of securities and funds, the delivery versus payment ( dvp ) system. the bank will continue its proactive support for ongoing projects, including the complete online settlement of corporate bonds and stocks. third, the bank has continuously reviewed the effects of its various policy measures and operations, adjusting these in light of prospective changes in financial markets and at financial services providers. in 1999, the bank began to accept abss as collateral for its market operations to provide liquidity, and since then it has expanded the scope of abss as eligible collateral. currently, the bank is also working on detailed ways of using syndicated loans as collateral, a project for which it has sought the opinions of market participants. in the summer of 2003, the bank launched operations to purchase abss. this represents an unconventional policy measure for a central bank. however, since the market for abss is still in an embryonic stage, with relatively few market participants willing to assume the associated risks and with difficulties in arranging the securities, the bank decided to shoulder the credit risk of holding abss itself. although it is conceivable that this intervention by the bank may distort the price discovery function of the market and thereby jeopardize its sound development, the bank's design and management of the purchase scheme makes careful allowances for this risk. the bank wishes to make every effort to cooperate with market participants in the revitalization of credit markets. to this end, the bank has inaugurated a “ workshop on securitization. ” i hope that various market participants, including both originators and investors, will take part in the workshop and suggest further ways to nurture and improve these credit markets. i expect this workshop to provide valuable insights in these areas. concluding remarks to achieve a dynamic