. this is attributable to the devastating damage to the production facilities in the disaster areas as well as electricity supply constraints and supply - chain disruptions experienced across wider areas. the pronounced bis central bankers ’ speeches production decline led to an export decline. as a result of the production decline, exports registered an almost 15 percent cumulative drop from february in the subsequent two months combined. second, the earthquake also affected the sentiment of economic entities. private consumption declined as voluntary restraint by consumers dampened spending, particularly for services such as tourism and eating out. moreover, the impact of the disaster went beyond just the sentiment of the japanese people to affect the global perception of japan being safe and secure. although the current radiation levels in tokyo are roughly the same as in amsterdam, berlin, or paris, the number of visitors from abroad for business purposes or as tourists fell sharply below the level registered a year before, declining by 50 to 60 percent after the recent earthquake ( slide 9 ). third, despite such a sharp and significant drop in production, the economy is returning to a gradual recovery path with the easing of the supply - side constraints. the current downward pressure on the economy following the disaster is basically arising from the abrupt supplyside shock. the fundamental conditions for growth – namely, expansion of overseas economies – remain intact. in this regard, the current situation differs from the period following the lehman shock when demand evaporated both at home and abroad due to financial contraction. in fact, the restoration of supply - chain disruptions has been making steady progress, thanks to strenuous efforts by private firms. regarding the electric power shortage problem, although uncertainty and concerns remain in the medium and long run depending on the outcome of the ongoing discussion about future nuclear power policy, we are seeing better prospects for surviving the summer, when demand peaks due to the use of air conditioners. we have seen more thermal power plants resume operations, more firms install in - house power generation facilities, and firms and households make various efforts to conserve electricity. manufacturing production is gradually recovering from the bottom in march and is expected to be restored to the pre - disaster level sometime in the third quarter of this year. fourth, with regard to the global implications of the recent earthquake, its negative impact spread to overseas economies through supply chains with a certain time lag. production in the auto and electronic products industries dropped in europe, the united states, and asia ( slide 10 ). the impact of supply - chain disruptions as i will explain

trusted counterparty standing between market participants that no longer trust each other. during the crisis, it was central banks that played this role. in this situation, major central banks implemented measures that in essence directly provided liquidity to fund - raisers in markets where market functioning had deteriorated significantly. for example, in 2008, the federal reserve introduced a policy measure to lend to cp issuers and holders of asset - backed securities ( abss ). the bank of japan also purchased cp, asset - backed commercial paper ( abcp ), and corporate bonds in order to cope with the rapid decline in liquidity in these markets, which were the main funding sources for large firms that were directly hit by the financial crisis. provision of foreign currency liquidity the third challenge was the provision of foreign currency liquidity. in bagehot ’ s day, liquidity meant liquidity in the home currency for domestic transactions and gold for international transactions. there is a reference in bagehot ’ s book to a situation in which the bank of england did not sufficiently carry out its lender of last resort function due to concerns over a shortage of gold. during the recent financial crisis, liquidity in the u. s. dollar funds market declined significantly and dollar funding became an extremely pressing issue, especially for private financial institutions whose home currency was not the dollar. in order to ensure that central banks could smoothly provide dollars to home financial institutions, financial institutions needed to have a sense of security that central banks themselves could provide unlimited amounts of dollars. to this end, major central banks, including the ecb and the bank of japan, secured dollar funds by making currency swap arrangements with the federal reserve and then introduced dollar funds - supplying operations domestically. the currency swap arrangements were made not only for the dollar but also for other currencies. for example, the ecb and the swiss national bank established a currency swap arrangement for swiss franc funding, and the bank of japan and the bank of korea established a currency swap arrangement for yen funding, both of which contributed to restoring stability in foreign currency funding markets. unconventional monetary policies since the recent financial crisis, major central banks have also been implementing unconventional policies that aim at stabilizing economic activity. these are intended to deal with the challenge of achieving monetary easing effects to return the economy to a stable recovery path when nominal short - term interest rates are already near zero. one example is the increase in the government bond purchases decided by the federal reserve in the autumn of 2010, which