november 24, 2020 bank of japan policy measures to date and in the future, in response to the spread of covid - 19 - - lessons from the global financial crisis - opening remarks at the virtual conference co - hosted by the international monetary fund and the university of tokyo kuroda haruhiko governor of the bank of japan introduction it is my great honor to speak today at this virtual conference co - hosted by the international monetary fund ( imf ) and the university of tokyo. it has been a decade since the global financial crisis - - or gfc - - and two decades since japan's financial crisis and the asian financial crisis. today, we are facing a new crisis, triggered by the spread of covid - 19. this conference is intended to learn from our past experience and to gain insight into how best to respond to these extremely challenging circumstances. in this sense, the conference could hardly be more timely. i. policy responses to date regarding covid - 19 the spread of covid - 19 has had an even greater impact on the global economy than the gfc. the gdp growth rate for the april - june quarter of 2020 declined substantially in many countries. moreover, due to concerns over the deterioration in the real economy, global financial markets temporarily became volatile in march : there was a sudden drop in the prices of stocks and credit assets ; the cp and corporate bond markets became frozen ; and there were substantial outflows of capital from emerging economies. in response to these developments, governments, central banks, and international organizations have been swift to implement policy response measures, both fiscal and monetary, on an unprecedented scale. these responses have helped economic entities with their financing, markets to regain stability earlier than in the case of the gfc, and the global economy to start picking up. i would point to three particularly important elements in the policy responses taken so far to address the impact of covid - 19. the first is that swift and abundant liquidity provision by central banks and international organizations prevented the materialization of a negative feedback loop between economic and financial activities. one of the lessons learned from the gfc is that if market confidence is undermined amid heightening uncertainty, there is the possibility of the real economy and finance falling into an adverse spiral. there would be a significant credit contraction as financial institutions'funding becomes difficult. mindful of these risks, central banks have played a considerable role in recovering market confidence, acting as the global lender of last resort, with ample liquid

and an increase in production has not yet restored a clear increasing trend, private consumption has remained firm on the back of favorable labor and income conditions. exports have been showing signs of recovering, albeit with fluctuations. infrastructure investment has recently been increasing partly due to the policy authorities ’ prop - up measures, and a slowdown in an increasing trend in fixed asset investment as a whole has come to a halt. business sentiment, particularly in the manufacturing sector, has been improving. from a longer - term perspective, the chinese economy is in a transition phase from high growth to stable growth, and there remains uncertainty whether a smooth transition could be made. having said that, as for the immediate future, in addition to policy effects both from the fiscal and monetary fronts, inventory adjustment is likely to progress, supported by firm domestic demand, and exports are also expected to pick up, and thus the recovery trend in the chinese economy will gradually become pronounced. developments in the nies and asean economies at present, partly due to stagnant exports to europe and other countries, the pick - up in the nies and the asean economies has moderated. however, as for the outlook, if the global economy increases its brightness led by the united states and china, exports will gradually pick up and the pace of recovery will likely accelerate. developments in global financial markets meanwhile, the global financial markets have considerably restored stability. global investors have gradually become ready to take risks. behind that are ( a ) in the united states, amid a continuing moderate recovery, the “ fiscal cliff ” has been barely averted, ( b ) in europe, progress has been seen in policy responses with regard to the debt problem, and ( c ) in the bis central bankers ’ speeches chinese economy, a silver lining has gradually started to be seen. against such a backdrop, stock prices in the united states and europe bottomed out last summer and have been rising. as investors have turned ready to take risks, yields on southern european countries ’ government bonds have declined substantially. in the foreign exchange market, the euro has been bought back and the yen has been depreciating. outlook for overseas economies to summarize the above, overseas economies will gradually emerge from the deceleration phase and turn to a moderate recovery, with the united stated and china being driving forces. of course, we cannot keep our eyes off the developments in the european debt problem. whether the recovery in the u. s. economy will continue while overcoming the fiscal problem requires