rates remain steady at low levels. yields on long - term government bonds fluctuated and rose temporarily to around 1. 3 percent in lateseptember mainly due to uncertainty over the disposal of non - performing loans by banks, but declined again thereafter and are recently moving around 1. 1 - 1. 2 percent. yield spreads between private bonds ( bank bonds and corporate bonds ) and government bonds remain virtually unchanged. meanwhile, stock prices have been falling again in line with a decline in u. s. and european stock prices, reflecting the ongoing selling of japanese stocks by foreign institutional investors. stock prices are moving around 8, 500 yen recently. in the foreign exchange market, the yen is currently being traded in the range of 122 - 125 yen to the u. s. dollar as the market continues to be nervous due mainly to the uncertainty regarding global economic conditions and the unstable situation in the middle east. with regard to corporate finance, private banks are becoming more cautious in extending loans to firms with high credit risks while they continue to be more active in extending loans to blue - chip companies. the lending attitudes of financial institutions as perceived by firms are becoming slightly more severe. in the corporate bonds and cp markets, the issuing environment for firms with low credit ratings is still severe, but the environment for firms with high credit ratings is accommodative. credit demand in the private sector continues to follow a downtrend mainly because firms are decreasing their business fixed investment while continuously reducing their debts. amid these developments, private banks ’ lending continues to decline by about 2 - 3 percent on a yearon - year basis. the amount outstanding of corporate bonds and cp issued is recently moving near the previous year ’ s level. meanwhile, according to business surveys, the financial position of firms, particularly that of small firms, remains severe. the monetary base continued to exhibit a high year - on - year growth rate of around 20 - 30 percent, although the rate has slowed slightly. the year - on - year growth rate of the money stock remained at around 3. 5 percent. funding costs for firms continue to be at extremely low levels on the whole. against the above background, the financial environment as a whole is summarized as follows. money market conditions overall continue to be extremely easy. the money stock and the monetary base maintain high growth rates relative to that of the economic activity as a whole. however, stock prices remain unstable and long - term interest rates are showing relatively large fluctuations. in corporate finance,

markets have generated many benefits for the region, but have also enhanced linkages with global financial and bond markets, thereby inducing changes in capital flows. the resultant greater volatility of exchange rates and overvaluation of the currency, and their adverse impacts on the economy have been pointed out as serious concerns. as a result, some economies occasionally set a low policy interest rate in response to a decline in the global interest rate. • this, however, might lead to a greater positive output gap in the economic expansionary phase, thereby overheating the economy and promoting rapid credit growth and increasing inflationary pressures. this may not only amplify the boombust business and financial cycles, but also deteriorate the current account balance. it may also incur the risk of undermining a central bank ’ s credibility by failing to fulfill its price stability mandate in the inflation - targeting economies. going forward, economies in the region may need to prepare for more volatile interest rate movements in the face of global interest rate hikes as the global economy gradually recovers. this in turn may provide these economies with more room to conduct an independent monetary policy. bis central bankers ’ speeches • fourth, to cope with excessive capital flows and associated accumulation of financial imbalances, economies in the region frequently use a wide range of macroprudential policy measures. their effectiveness depends largely on countryspecific economic and financial market circumstances. questions such as what macroprudential measures should be taken to cope with financial imbalances, or what is the correct balance between macroprudential policy and monetary policy, remain unsettled, and an international consensus has not yet been formed. • going forward, further discussions are expected among central banks, regulatory institutions, and other policy makers on the issue of how to achieve price stability, sustainable economic growth, and financial stability. i hope that such discussions, through sharing each other ’ s experiences and lessons learnt from the past, will lead to some useful insights into monetary policy conduct implications. this concudes my speech. thank you very much for your kind attention. bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches