commitment to achieve the price stability target. as we just heard from governor noyer, the european central bank has stepped up its monetary easing. and in the united states, the federal reserve concluded its asset purchase program but has maintained the view that the policy rate is likely to be kept at a near - zero level for a considerable time. the unconventional monetary easing measures, taken by the central banks to address unprecedented challenges facing the economies, are often said to have had unintended, and even unfavorable, impacts on the functioning of financial markets. my quick response is that i do not fully agree. although i do share the views that massive monetary easing would indeed have a considerable impact on the market and that central banks should be vigilant against market developments, thus far serious impairment of the market function has not been observed. in the rest of my remarks, i would like to elaborate on why i think this is the case by focusing on three topics : “ search for yield ” activities, negative interest rates, and market liquidity. “ search for yield ” activities first i would like to address a frequently cited remark that unconventional monetary stimulus could destabilize financial markets and the economy at large by encouraging “ search for yield ” activities among investors and thus creating financial imbalances. as one of their transmission channels, unconventional monetary policy measures including the qqe aim to promote portfolio rebalancing by investors and thus push down the risk premium in prices of various asset classes. in this regard, one can say that a rise in asset prices and a decline in volatility are intended effects of the qqe. in this context, i would stress instead that we should be mindful of the risk that “ search for yield ” activities enter into a self - fulfilling cycle and destabilize the markets and the economy. the combination of higher prices and the lower volatility of an asset induces investors to overvalue liquidity of the asset and drive up prices. this could in turn invite another round of investment, raising asset prices in a self - fulfilling manner. in addition, if a rise in asset prices creates overly bullish expectations among non - financial entities such as the corporate and household sectors, it could trigger excessive risk - taking behavior in these sectors as well. thus far, we have not observed signs of self - fulfilling, overheated price movements in japan ’ s financial markets. this is evidenced by occasional price adjustments reflecting factors such as geopol

and the real economy has improved substantially, partly due to the effects of large - scale macroeconomic policies. despite these improvements in the real economy, prices and wages have remained sluggish. this phenomenon has recently been labeled the " missing inflation " or " missing wage inflation " puzzle. looking back on the discussions at our conference last year, adaptive elements in inflation expectations formation were highlighted as a possible factor behind the missing inflation. it is urgent that we explore the mechanism behind the changes in price and wage dynamics especially in advanced economies. turning to the financial system, after ten years since the outbreak of the global financial crisis, the robustness of the global financial system has been enhanced through the efforts of financial authorities, which include the finalization of basel iii, and those of financial institutions to strengthen their risk management practice. however, it is necessary to pay attention to developments in the so - called shadow banking sector, which is not sufficiently covered by conventional supervision and regulations. moreover, in recent years, the low profitability of financial institutions, especially in advanced economies, has come to pose a new challenge for global financial stability. as such, central banks are faced with new challenges in terms of financial stability as well. from a longer perspective, central banks are faced with an important challenge posed by innovations in information and communication technology. we see remarkable progress in a wide range of technologies, such as artificial intelligence, big data analysis, and distributed ledger technology. we also see the rapid development of smartphones, social network services, and e - commerce. the application of these technologies in the field of financial business, typically dubbed " fintech, " has already brought about drastic changes in the way payments are made in many countries. these developments are expected to continue in the future, promoting further changes in business models at financial institutions. of course, over the past several decades, central banks - - in their role as the " bank of banks " - - have made various efforts to improve the safety and efficiency of payment and settlement systems, for example by introducing real - time gross settlement, simultaneous settlement of funds and securities, and simultaneous foreign exchange settlement. furthermore, with regard to currency issuance, a fundamental role of central banks, some central banks are now exploring the possibility of issuing central bank digital currency. thus, in the long - run, an era of major transformation may lie ahead even in the core operations of central banking, such as the " issuer of banknotes " and the " bank of banks.