efforts to maintain the confidence. governments make their efforts to maintain the mediumto long - term fiscal balances. central banks maintain the stability in prices and the financial systems through the conduct of monetary policy, through actions as the lender of last resort, through financial supervision, and others. private banks maintain their capital base, manage various risks, and provide credit intermediation and payment services. my point here today is the interdependency of confidence. confidence in each issuer is supported not only by the issuer ’ s own efforts but also by the fact that confidence in other issuers is maintained and that members in society understand the importance of confidence in each other. now, i will elaborate on the interdependency of confidence. determination by the government to underpin confidence in private financial institutions first, confidence in bank deposits of private banks, or in debts of financial institutions, is significantly affected by confidence in governments as well. the global financial crisis after the failure of lehman brothers demonstrated that. after the failure, financial institutions lost confidence in each other ’ s creditworthiness, and the interbank money markets almost stopped working. under the circumstances, central banks acted as the lender of last resort and aggressively provided funds in order to deal with the liquidity shortage of financial institutions. although the provision of liquidity by central banks was extremely important during the crisis after the failure of lehman brothers, it alone was not enough to restore the stability of the financial system. that was because the adverse feedback loop between the financial system and the real economy eroded capital positions of financial institutions and thereby confidence in their solvency significantly. as the central issue shifted from the liquidity shortage problem to the capital shortage problem, governments were required to inject public capital and to guarantee senior debts of the financial institutions in order to bis central bankers ’ speeches restore confidence in private financial institutions. the amount of public capital injected by the governments of the united states, united kingdom, germany and france during the recent global financial crisis reached an equivalent of 84 trillion yen. 1 the experience above suggests that the stability of money and the financial system also depends on confidence in governments. support by the public to underpin confidence in a government second, having talked about the importance of confidence in a government, i would like to emphasize that confidence in a government is, in the end, underpinned by support by the public. after the global financial crisis, fiscal conditions in many countries deteriorated seriously as a result of decreases in fiscal

has slowed somewhat compared to that in summer 1996, reflecting the shift of assets to those outside m2 + cds. recently, m2 + cds average outstanding grew at around 3 per cent on the whole. regarding money market rates, the overnight call rate ( uncollateralized ) has moved at a level slightly below the official discount rate. the 3 - month cd rate has stayed at around 0. 55 per cent. meanwhile, the long - term government bond yield declined to a record low of below 2. 1 per cent in early april 1997. however, it recently rose to around 2. 5 per cent as market uncertainties about the economic outlook and about japanese financial institutions have gradually subsided in line with developments in the stock market. with respect to bank lending rates, the short - term prime lending rate has remained at a record low level of 1. 625 per cent since september 1995. the long - term prime lending rate had been moving at the record low of 2. 5 per cent since december 1996. reflecting movements in long - term interest rates, however, it was raised by 0. 6 percentage points to 3. 1 per cent in may 1997. on the stock exchange, the nikkei 225 stock average has been rising since the second half of april 1997, reflecting the fact that market uncertainties about the economic outlook and about japanese financial institutions have gradually subsided, and the strong u. s. stock prices. in early may, it recovered to above ¥20, 000 for the first time in four and a half months, and has recently continued to move at around ¥20, 000. in the foreign exchange market, the yen depreciated between april and early may to around ¥126 - 127 to the u. s. dollar. however, the yen ’ s depreciation was later reversed rapidly, as concerns about the appreciation of the u. s. dollar strengthened, and as the differential in interest rates between japan and the united states narrowed somewhat. the yen has recently moved at around ¥116 - 117 to the u. s. dollar. meanwhile, the yen has appreciated against the deutsche mark and recently has moved at around ¥68.