meltdowns, firms have greatly strengthened their balance sheets. many firms have refinanced high - cost debt, which has reduced the average interest rate on the debt of nonfinancial corporations more than 1 percentage point since the end of 2000. the average cost of servicing debt would have fallen even further if not for a second major trend - the extension of debt maturities. businesses replaced a substantial portion of their short - maturity debt with long - maturity debt, both to lock in low rates and to improve their ability to withstand a liquidity shock ( since long - term debt does not need to be continually rolled over ). in addition, many firms - especially in the most troubled industries - have retired debt through equity offerings and asset sales, which limited the growth of nonfinancial corporate debt in 2002 and 2003 to the slowest pace since the early 1990s. third, firms have significantly tightened their belts. over the past two years, the drive to cut costs has generated rapid productivity gains. this greater efficiency boosted corporate profitability in 2002 and 2003 despite rather tepid revenue growth. moreover, a pickup in revenue growth in the second half of last year helped companies leverage those productivity gains, producing a dramatic recovery in overall corporate profitability. over the course of 2003, operating earnings at s & p 500 corporations surged almost 25 percent, bringing profit margins to their highest levels in several years. fourth, risk premiums fell substantially last year as corporate governance scandals receded and investor sentiment turned markedly more positive. the recovery in stock prices reflects this brighter view. in addition, spreads on corporate bonds have narrowed appreciably - especially for the riskiest firms - and they now stand at the lowest levels in several years. this decline in spreads has been helped along by the beneficial effect of the balance sheet improvements that i mentioned a moment ago. indicators of corporate financial stress such as bond rating downgrades and default rates have returned to levels normally associated with economic expansion. delinquency rates on business loans at commercial banks have also declined, and our surveys indicate that, on balance, banks have recently eased the terms and standards on such loans. in another sign of improved sentiment, money has been flowing into riskier securities. for example, equity mutual funds have registered strong net inflows for nearly a year, as have high - yield bond funds. the more favorable tone in the bond market has been associated with a notable pickup in junkbond deals amid a surge of corporate bond issues

against fmis including payment and settlement systems, and playing a “ catalyst ” role to facilitate communication among wide - ranging players involved in fmis. under globalization of the economy and technological innovations, more and more transactions and payments are being made across borders and time zones, and more diverse players are now providing payment - related services. one of the challenges for private - sector entities to provide payment services related to global cash management and e - commerce is how to deal with unsettled exposures that arise from time - zone differences and payment operations at night hours and on weekends. central bank money is the solution that would ultimately erase these unsettled exposures through settlement with finality, but providing central bank infrastructure also involves costs. in taking both possible benefits and costs in account, the bank will continue to consider the most appropriate way to provide its central bank accounts and boj - net from both “ time ” ( i. e. operation hours of the boj - net ) and “ space ” ( i. e. eligibility criteria of the bank ’ s accounts ), so as to contribute to the overall economy. besides, banknotes are payment instruments that all the people can use 24 / 7, and under the innovation in information technology, there emerges an issue about whether central banks themselves should provide, in the future, digitalized payment tools that would substitute paper - based banknotes. indeed, some central banks have recently mentioned the possibility of central banks ’ issuing digital currencies, and there are arguments that central banks ’ digital currencies would be similar to the provision of central bank accounts not only to financial institutions but also to the general public. 2 the bank does not have a specific plan to issue digital currencies at this stage, but will deepen its research and analytical activities so as to understand the impact of technological innovations, fintech and distributed ledger on financial architectures and fmis while keeping all options open, including the possibility of the bank ’ s utilizing such advanced technologies in its own operations in future. moreover, taking into account the importance of the people ’ s “ trust ” towards financial services and fmis, the fact that the japanese financial system has maintained its stability during the recent global financial crisis could be a great advantage in developing innovative financial services in japan. on the other hand, as access to financial services expands through internet and mobile devices, new types of threats to financial systems and infrastructures, such as hacking and cyber - attacks, are gaining prominence. in order