s balance sheet going forward under the new framework. meanwhile, in a recent book, professor kenneth rogoff of harvard university argues that a negative interest rate policy is more effective than qe, not least because qe has had uncertain impacts so far compared to the conventional interest rate policy and there is difficulty in its calibration and communication. in this context, he calls for abolishment of cash as it would make further policy room for a negative interest rate. 4 while i am interested in his argument, the reality is that cash cannot be abolished in the near future. from the viewpoint of policy makers, a negative interest rate policy and asset purchases are not mutually exclusive. taking account of the existing financial system and financial market structures in japan, we have come to a conclusion that the bank of japan can proceed with more powerful monetary easing by controlling the yield curve through the appropriate combination of a negative interest rate policy and asset purchases. in conducting yield curve control, more detailed analyses - - both theoretical and empirical - on the appropriate level of short - and long - term interest rates are required. in particular, the conventional concept of a natural rate of interest and " monetary policy rules " are not sufficient, as they focus exclusively on short - term interest rates. research and discussion should be extended across the entire yield curve. kenneth s. rogoff ( 2016 ), " the curse of cash, " princeton university press. these issues are relevant for the federal reserve as well, although it already has discontinued asset purchases except for reinvestment. if one stands on the " stock view " of qe, suggesting that what matters for monetary easing effects is the central bank's holdings of assets rather than the amount of asset purchases during a period of time, the federal reserve's massive bond holdings is still providing monetary stimulus. if this is the case, the level of the short - term interest rate that is desirable for the federal reserve at present must be different from what would have been the case if the federal reserve had not held such massive amounts of bonds on its balance sheet. moreover, based on the experience in europe and japan, it is becoming increasingly evident that an excessively lowered and flattened yield curve could weaken the transmission mechanism of monetary easing by squeezing banks'profit. in addition, a decline in expected rates of returns of insurance and pension products may have an adverse impact on consumers'confidence. these aspects are not only of interest from a macroprudential perspective but also need to

yukitoshi funo : economic activity, prices, and monetary policy in japan speech by mr yukitoshi funo, member of the policy board of the bank of japan, at a meeting with business leaders, shimane, 3 october 2019. * * * i. recent economic and price developments a. overseas developments i would like to begin by talking about overseas economies, which have been growing moderately on the whole, although slowdowns have continued to be observed. in terms of the outlook, slowdowns are likely to continue for the time being ; thereafter, however, overseas economies are expected to grow moderately on the whole with their growth rates rising somewhat. according to the july 2019 world economic outlook update released by the international monetary fund ( imf ), global growth is forecast at 3. 2 percent for 2019 and 3. 5 percent for 2020. however, as downside risks concerning the global economy seem to be increasing, careful attention is warranted on the timing and pace of its pick - up. looking at developments by major region, the u. s. economy has been expanding moderately, although relatively weak developments have been observed in the manufacturing sector. the european economy has remained in its deceleration phase. the chinese economy has continued to see stable growth on the whole, but weakness has been observed in the manufacturing sector. other emerging and commodity - exporting economies have maintained their recovery trend as domestic demand has been firm on the whole. as for the outlook, the u. s. economy is expected to maintain its moderate expansion and the european economy is projected to gradually move out of its deceleration phase. the chinese economy is likely to broadly follow a stable growth path as authorities implement fiscal and monetary policies in a gradual manner. the growth rates of other emerging and commodity - exporting economies are likely to rise on the whole, mainly on the back of the effects of those economies'stimulus measures. risk factors to the overseas economic outlook are wide ranging and likely to be significant, as exemplified by ( 1 ) the u. s. macroeconomic policies and their impact on global financial markets, ( 2 ) the consequences of protectionist moves, including those observed in the u. s. - china trade friction, and their effects, ( 3 ) developments in emerging and commodity - exporting economies, the progress in global adjustments in it - related goods, ( 5 ) negotiations on the united kingdom's exit from the european union ( eu ) and their effects, and ( 6