february 22, 2023 bank of japan economic activity, prices, and monetary policy in japan speech at a meeting with local leaders in gunma tamura naoki member of the policy board ( english translation based on the japanese original ) i. economic activity and prices a. economic activity 1. current situation i will begin my speech by talking about recent developments in economic activity in japan. japan's economy, despite being affected by factors such as high commodity prices, has picked up as the resumption of economic activity has progressed while public health has been protected from covid - 19. the pace of recovery had remained moderate in japan, partly because steps to resume economic activity had been taken more cautiously than in other advanced economies ; nevertheless, real gdp growth has almost recovered to levels seen before the pandemic ( chart 1 ). let me explain the current state of japan's economy in more detail. first, a look at the household sector. although japan experienced the eighth wave of the pandemic this winter, the impact on private consumption has been limited compared with past cases, and private consumption continues to recover as a trend from the downturn brought about by the impact of the pandemic ( chart 2 ). this recovery trend has been supported by pent - up demand on the back of household savings that had accumulated during the pandemic and by the government's domestic travel discount program. next, the corporate sector. exports and production have increased as a trend, supported in part by high levels of order backlogs, with the effects of supply - side constraints waning ( chart 3 ). by goods, exports of automobile - related goods have increased moderately, as the tightness in global supply and demand conditions for semiconductors used in automobiles has gradually eased. those of capital goods have increased, supported by high levels of order backlogs. in contrast, exports of it - related goods such as semiconductors have been somewhat weak, with stronger adjustment pressure on those for smartphones and personal computers. as for corporate profits, while there are differences across industries and firm sizes, and despite having declined slightly recently, they have been at a historically high level on the whole, exceeding the level seen before the pandemic ( chart 4 ). by firm size, while corporate profits of large firms have been on a rising trend, those of small and medium - sized firms have been more or less flat. the business fixed investment stance has been active in both manufacturing and nonmanuf

mr ferguson looks at financial market lessons for bankers and bank supervisors remarks by mr roger w ferguson jr, vice - chairman of the board of governors of the us federal reserve system, before the bond market association, new york, on 28 october 1999. * * * i am delighted to be with you today to offer some remarks about financial markets and about how financial innovation and business practices are affecting the supervision and regulation of banks. as a result of the “ opportunities ” many of you and your colleagues have provided, we have learned much in recent years about risk management practices and about market dynamics during periods of stress. today i would like to discuss three elements of risk management in banks, and more broadly, in financial services. these topics might be of interest to you because, i believe, many of you play an important role in the risk measurement, management and mitigation activities in your firms. in addition, as barriers between financial firms dissolve, either because of market action or, as now seems likely, legislative mandate, we should all learn the risk management techniques that are current in other segments of the financial services market. bankers can and will learn from securities dealers and traders and vice versa. the topics that i would like to cover are lessons from last year ’ s turmoil, approaches banks take in measuring market and credit risk, and proposed changes in regulatory oversight. lessons from last year ’ s turmoil i would like to begin this afternoon by reviewing some of the central findings of a study issued this month by the bank for international settlements dealing with market events in the autumn of last year and then turn to bank supervisory matters. these findings offer important lessons for all of us who are interested in maintaining efficient financial markets that are undisturbed by systemic risks. i would note that the full report, entitled a review of financial market events in autumn 1998, is available on the bis website, www. bis. org. a central point in the paper is that banks and many other market participants are leveraged institutions. as a consequence, they are vulnerable when things go wrong. and so are their creditors, and then their creditors, too. this use of leverage allows financial institutions to employ capital in the most efficient and effective ways so as to provide maximum benefits to our society. when it comes to banks in particular, the key question is to what degree they should be leveraged, and that, in turn, depends largely on how they manage risk. risk management practices used by both banking and non - bank organizations have improved