suggest feasible policy measures to achieve this. i am looking forward to theoretical developments in the future, and in this regard, the experience with qqe must be useful. a deeper understanding of the effects and transmission mechanisms of “ monetary policy in a post - crisis world, ” namely, unconventional monetary policy, is important for both central banks and academia. i wish you every success and productive discussions. thank you. bis central bankers ’ speeches appendix : monetary policy in japan end of period, tril. yen monthly average, % end - 2014 270 tril. yen monetary base call rate ( overnight, uncollateralized, right scale ) 2. 5 end - 2013 202 tril. yen end - 2012 138 tril. yen 3. 0 2. 0 1. 5 1. 0 projected 0. 5 cy 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 0. 0 zero interest rate policy ( 1999 / 2 - 2000 / 8 ) quantitative easing ( 2001 / 3 - 2006 / 3 ) comprehensive monetary easing ( 2010 / 10 - 2013 / 4 ) quantitative and qualitative monetary easing ( 2013 / 4 - ) source : bank of japan. bis central bankers ’ speeches

, a large - scale financial crisis involving the failure of a number of major japanese financial institutions erupted, and, in the summer of 1998, the inflation rate fell below 0 percent. in this situation, the bank consistently lowered its policy rate, which had stood at 6 percent in august 1990, to close to zero at 0. 25 percent in september 1998. hence, deflation and the zero lower bound on nominal interest rates no longer were a theoretical possibility but became a reality. early theory of unconventional monetary policy taking the situation in japan as a cue, professor paul krugman in 1998 constructed a theoretical model of unconventional monetary policy offering a prescription of how to escape a liquidity trap. 1 specifically, he pointed out that japan ’ s economy at the time was suffering paul r. krugman, “ it ’ s baaack : japan ’ s slump and the return of the liquidity trap, ” brookings papers on economic activity, 1998, no. 2 : 137 – 205. bis central bankers ’ speeches from a shortage of demand even at zero interest rates. he argued that the only way to overcome deflation was through monetary policy by substantially increasing the money supply and raising inflation expectations, thereby making real interest rates sufficiently negative. it appears that professor krugman ’ s model already incorporated elements of the unconventional monetary policy measures eventually adopted. however, given that in practice it is difficult for the central bank to directly control the money supply and that, moreover, the bank was not sufficiently sure about the mechanisms through which monetary policy could influence expectations formation, the bank did not put the theory straight into practice. ii. previous unconventional monetary policies – the zero interest rate policy ( zirp ), quantitative easing ( qe ), and comprehensive monetary easing ( cme ) introduction of the zirp given a situation in which economic activity and inflation did not improve even though the policy rate had been lowered to 0. 25 percent, the bank discussed a series of unconventional monetary policy measures and put them into practice in stages. as a first step, in february 1999, the bank introduced the zero interest rate policy ( zirp ), which guided the uncollateralized overnight call rate to around 0 percent by providing the market with more funds than necessary for financial institutions to meet their reserve requirements. moreover, in april 1999, given that there was no room for further rate reductions, the bank introduced qualitative forward guidance in order to flatten the yield curve by indicating the future expected