haruhiko kuroda : overcoming deflation and quantitative and qualitative monetary easing speech by mr haruhiko kuroda, governor of the bank of japan, at the kisaragi - kai meeting, tokyo, 20 september 2013. * * * introduction thank you for giving me the opportunity to address you today. i assumed the position of bank of japan governor just six months ago, on march 20. at the time, as the governor of the bank, which has a mission to ensure price stability, i resolved to pull japan ’ s economy out of the deflation that has lasted for some 15 years. this is because, due to prolonged deflation, “ deflationary expectations ” ( the recognition that prices will decline or not increase ) were entrenched among people and firms, and this situation had been depriving japan ’ s economy of vitality. reflecting my determination, the new policy of quantitative and qualitative monetary easing ( qqe ) was introduced in april. the policy has already started to exert effects. positive developments in the real economy and financial markets have been spreading, and people ’ s expectations in terms of economic activity and prices have been improving. today, i will first briefly discuss developments in economic activity and prices at home and abroad. then i will turn to a description of the deflation that has continued in japan for some 15 years and delve somewhat into the background and what should be done to overcome it. i. recent developments in economic activity and prices let me start with recent developments in economic activity and prices. to summarize, with the qqe making steady progress, japan ’ s economy has been proceeding smoothly along a path toward achieving the “ price stability goal ” of 2 percent, as the bank has presented in its outlooks. economic activity and prices japan ’ s economy is recovering moderately, as a virtuous cycle from income to spending is gradually starting to operate in both the corporate and household sectors. in the corporate sector, corporate profits and business sentiment have improved significantly. a focus of attention had been whether this improvement would genuinely lead to an increase in spending, namely, business fixed investment, and recent data have confirmed that business fixed investment is starting to pick up mainly in the nonmanufacturing sector ( chart 1 ). for example, in the gdp statistics, business fixed investment in real terms for the april - june quarter increased on a quarter - on - quarter basis for the first time in six quarters

associated with trust preferred securities was not previously defined, the final rule clarifies that such subordinated debt is considered debt for most purposes under the policy statement. it provides for a five - year transition period, however, to give qualifying small bhcs sufficient time to conform their debt structures. the rule also allows small bhcs to refinance existing issuances of trust preferred securities without losing the exempt status of the related subordinated debt during the transition period, so long as the amount of the bhc's subordinated debt does not increase in the aggregate. finally, the notice informs the public that the federal reserve expects to review the asset threshold at least once every five years to determine whether further adjustments might be appropriate. conclusion the federal reserve believes that ensuring strong capital levels and good risk management at u. s. banking organizations is critical to the health of our banking and financial system. our regulatory and supervisory efforts support this broad objective. that is why we provide guidance around emerging risk issues, such as the current proposals for commercial real estate and nontraditional mortgages. we also work to make sure innovations in financial instruments are encouraged and used in appropriate risk - management frameworks, and we periodically will change regulatory policy to support sound risk management. at the end of the day, it is our job as bank supervisor and central bank to ensure that banks are operating in a safe and sound manner, and that financial stability is maintained. thank you.