too far from the target and if inflation expectations are firmly anchored. 1 however, macroprudential policy also has links to microprudential policy and fiscal policy. all these policy areas may need to be involved in order to curb systemic risks in the most effective way. what instrument to choose in a specific situation should depend on the problem at hand and the purpose of the policy action. the most effective tool may not always be in the hands of the macroprudential supervisor. finally, in the past few years, macroprudential tools have been developed to tackle risk stemming from the traditional banking sector. macroprudential policy has thus mainly been implemented as a form of banking regulation. as a consequence, resilience in that sector has increased. but, on the other hand, the non - banking sector is increasing rapidly and so, most likely, is risks related to it. this being my third and final issue, i think it is most important that we increase our understanding of these changing trends and the risks they entail, and that we start developing macroprudential instruments that can counteract these risks. in order not to fall behind the curve, work on developing new tools should start promptly, as it will take years before such instruments can be in place at national levels. see also skingsley, c., ( 2015 ), inflation - targeting policy after the financial crisis, speech at almega, stockholm 2015. bis central bankers ’ speeches

bank of japan presents summaries of articles published in the november edition of its quarterly bulletin bank of japan, communication, 1 / 12 / 98. profits and balance - sheet developments of japanese banks in fiscal 1997 overview operating profits of japanese banks in fiscal 1997 amounted to ¥5. 4 trillion, down by 14 % from the previous fiscal year. 1 this decrease was primarily due to the following factors : ( 1 ) the disappearance of a temporary increase in trust fees ( income ) of trust banks in fiscal 1996 ; ( 2 ) the modest fall in net interest income on domestic operations due mainly to narrowing interest margins ; and ( 3 ) the slight decrease in gross profits on international operations as a result of the expansion of the “ japan premium ” and the downsizing of overseas branches and subsidiaries. 2 transfer to the special loan - loss provisions ( slp ) and loan write - offs including those in trust accounts3 amounted to ¥13. 3 trillion, which is almost the same figure as the peak recorded in fiscal 1995. 4 due to a considerable amount of transfer to the slp and loan write - offs, both recurring losses ( ¥5. 2 trillion ) and net losses ( ¥4. 8 trillion ) marked record highs. 5 risk - based capital adequacy ratios at end - march 1998 at many banks exceeded those at endmarch 1997. this improvement was due mainly to banks ’ efforts to reduce their risk - adjusted “ japanese banks ” refers to all banks, comprising the member banks of the federation of bankers associations of japan ( zenginkyo ), which consists of 10 city banks, three long - term credit banks, seven trust banks ( excluding foreign - owned trust banks and trust banks that started business after october 1993 ), the 64 member banks of the regional banks association of japan ( referred to as regional banks ), and the 64 member banks of the second association of regional banks ( excluding hanwa bank, which was liquidated in january 1998 ; referred to as regional banks ii ). figures in this report exclude data for hokkaido takushoku bank, tokuyo city bank, and kyoto kyoei bank. “ operating profits ” signifies earnings from core banking operations and is calculated by subtracting “ transfer to the allowance for possible loan losses, ” “ general and administrative expenses, ” and “ debenture issuance expenses ” from the sum of “ net interest income ” ( the excess of interest income on such items as loans and securities over interest expenses on such debts