it examines a wide range of indicators and conducts various analyses, and ultimately makes a discretionary judgment as to whether the implementation of measures is indeed necessary. with a view to analyzing and assessing financial system stability and making use of macroprudential measures, close cooperation between the fsa and the bank is also important. in that regard, the two entities together established in june 2014 a task force with the aim of holding regular joint meetings to exchange views on financial stability, with participants including the fsa commissioner and the bank ’ s deputy governor. the fsa and the bank have been exchanging views frequently at various levels and maintaining close cooperation, and the meetings will further strengthen such cooperation. bis central bankers ’ speeches iii. the relation between monetary policy and macroprudential policy now let me turn to the issue of how much a central bank should involve itself in macroprudential policy. as is the case here in the united kingdom, having experienced the recent financial crisis, a central bank ’ s involvement in ensuring the stability of the financial system has strengthened globally. the bank of japan act stipulates that the purpose of the bank is to carry out currency and monetary control as well as to contribute to the maintenance of the stability of the financial system, and therefore the bank is responsible for taking care of both tasks equally ( chart 6 ). looking back, the following two cycles have often synchronized : the cycle of economic activity, or the output gap, and the financial cycle – in other words, the buildup of financial imbalances and their collapse. that is because of a feedback loop in which changes in the output gap and changes in the financial cycle have reinforced each other, leading to larger changes for both. in japan, monetary policy and macroprudential policy are therefore considered to be complementary. the bank ’ s activities on the macroprudential front are in line with its mission as stipulated in the bank of japan act, just like its microprudential activities, such as on - site examinations and off - site monitoring. based on that, the bank also allocates considerable management resources to conduct prudential policy that aims to ensure the stability of the financial system, as well as monetary policy that aims to maintain price stability. even if monetary policy and macroprudential policy are considered to be complementary to each other in the long run, depending on the economic phase, there may be cases in which asset prices surge under low inflation. therefore, in the short run,

countries, a stronger common euro area cycle can now be observed. a sound economic management should reflect the increasing interdependence of euro area economies and ensure that excessive differentials in inflation, growth and competitiveness are addressed. four guiding principles should be heeded in order to ensure a sound economic management of the euro area as a whole : rigorous implementation of the stability and growth pact ; the completion of the single market ; the implementation of the structural reforms in the lisbon agenda ; and the need to monitor carefully at country level the evolution of unit labour costs and competitiveness indicators in general. we have to consider that the euro has already brought a number of benefits, including price stability, favourable medium and long - term interest rates, and a remarkable degree of resilience in a complex international environment. these achievements make a significant contribution to ensuring sound economic management, but national economies also need to adapt and further liberalise their economies. thank you for your attention. references altissimo, f., m. ehrmann and f. smets ( 2006 ), “ inflation persistence in the euro area : a summary of the inflation persistence network evidence ”, national bank of belgium working paper no 95. anderton, r., f. di mauro and f. moneta ( 2004 ), “ understanding the impact of the external dimension of the euro area : trade, capital flows and other macroeconomic linkages, ” ecb occasional paper no 12. asdrubali, f., b. sorensen and o. yosha ( 1996 ), “ channels of interstate risk sharing : united states 1963 - 1990 ”, quarterly journal of economics, cxi, november : 1081 - 1110. baele, l., a. ferrando, p. hordahl, e. krylova and c. monnet ( 2004 ), “ measuring financial integration in the euro area ”, ecb occasional paper no 14, april. baldwin, r. ( 2006 ), “ the euro ’ s trade effects, ” ecb working paper series no 594. benalal, n., j. l. diaz del hoyo, b. pierluigi and n. vidalis ( 2006 ), “ output growth differentials across the euro area countries : some stylised facts ”, ecb occasional paper series no 45. bils, m. and p. klenow ( 2004 ), “ some evidence on the importance of