that the bank of japan had been taking all possible steps to maintain japan ’ s financial intermediation function and ensure smooth fund settlement. moreover, the international bankers association, which is a group of foreign financial institutions active in japan, issued a press release on march 15, soon after the earthquake, stating that major foreign financial institutions in japan were continuing to operate business as usual. subsequently, senior executives of such institutions visited japan one after another and expressed their commitment to continue to do business in japan. along with such communication, it is, as i mentioned earlier, of utmost importance that settlement systems and the financial markets physically continue to function as normal. once financial infrastructure continues to function normally, unfounded rumors will disappear in due course. if, on the contrary, financial infrastructure does not function normally, the situation will bis central bankers ’ speeches deteriorate further. for that reason, even in times of disaster, it is important to make the necessary preparations to enable the normal functioning of financial infrastructure. in this regard, it has driven home to me the importance of the “ logistics ” of providing human and physical resources, and within this the importance of the location of backup centers. the foremost challenge for japan today is responding to the acute emergency after the disaster. financial infrastructure is vital not only in this emergency phase immediately after the disaster, but also in the process of economic rebuilding that will gradually become more and more center - stage. the financial markets have the most important role as the infrastructure for providing the financing necessary for this rebuilding. after the great kanto earthquake of 1923, foreign currency - denominated government securities were issued to cover the rebuilding costs. at that time, the government was forced to issue securities at high interest rates. since the recent earthquake, there have been 12 auctions for 35. 0 trillion yen worth of newly - issued government securities including treasury discount bills. despite the unprecedented major earthquake and subsequent disasters and despite the fact that japan ’ s fiscal conditions remain severe, it was still possible to issue securities at low interest rates in a stable manner. this was possible partly because the markets have confidence that the aim of japan ’ s monetary policy is to achieve sustainable growth with price stability and not to facilitate government financing. it is not easy to get a sense of the importance of the infrastructure at the heart of society, such as electricity supply and the road network, when it is functioning as normal. the recent disaster has made us recognize that, once such infrastructure is damaged and impaired, repairing it

sayuri shirai : monetary easing and communication policy – a review based on several surveys speech by ms sayuri shirai, member of the policy board of the bank of japan, at a seminar held at columbia university, new york city, 27 february 2014. * i. * * introduction it is a great honor to be here today and have the opportunity to speak at columbia university. i would like to add how very nice it is to return to this university, where i received my ph. d. in economics, and i am looking forward to exchanging views with professors and students after my presentation. today, i would like to talk about communication on monetary policy – a topic of growing interest among central banks – in the context of the bank of japan. to begin with, let me pose a question : why do central banks pay special attention to their communications on monetary policy with the public ( meaning market participants and the general public )? i think there are at least three reasons : ( 1 ) to ensure central bank accountability ; ( 2 ) to enhance the effectiveness of monetary policy ; and ( 3 ) ( in a narrower sense ) to make active use of communication as a nontraditional monetary easing measure among central banks in the face of the zero lower bound on short - term interest rates. communication plays a crucial role in successful conduct of monetary policy by the bank. i would like to highlight three reasons why this is so. first, the bank adopted its 2 percent price stability target in terms of the year - on - year rate of change in the consumer price index ( cpi ) in january 2013. there is an inherent challenge in convincing households of the benefits of this target, since they tend to see a rise in inflation as unfavorable. this is especially true when a rise in wages does not take place immediately, or expectations of future wage growth are not fulfilled. thus, communication is important in this regard. second, as stipulated in the joint statement of the government and the bank of japan on overcoming deflation and achieving sustainable economic growth, released in january 2013, the bank recognized that the inflation rate consistent with price stability on a sustainable basis would rise as efforts by a wide range of entities to strengthen the competitiveness and growth potential of japan ’ s economy progressed ( chart 1 ). based on this recognition, the bank set the price stability target at 2 percent. in this spirit, quantitative and qualitative monetary easing ( qqe ) was introduced in april 2013. thus, promoting