, and nonferrous metals, are important. international commodity prices rose rapidly until spring 2011 and have experienced some adjustment since the end of april. it is difficult to forecast the short - term fluctuations of market - determined international commodity prices. thus, in making its forecast, the bank assumed that such prices are likely to continue a moderate uptrend given strong growth in emerging economies. expressing the outlook in numerical terms, the year - on - year rate of change in the cpi is projected to be 0. 7 percent both in fiscal 2011 and 2012. if this projection materializes, the cpi for fiscal 2011 will become positive on a year - on - year basis for the first time in three years, although this requires a supplemental explanation. in august 2011, the ministry of internal affairs and communications, which compiles the cpi, is scheduled to conduct the base - year change to the cpi, regularly conducted every five years. it has been pointed out that there is usually a technical upward bias in the cpi compilation – namely, a greater chance of having a somewhat higher inflation rate on a year - on - year basis in the period immediately before the revision because substantial price declines in goods such as personal computers and televisions are not sufficiently reflected. thus, the rebasing is likely to cause the year - on - year rate of change in the cpi to be revised downward. although there are some points that should be kept in mind, as described earlier, japan ’ s economy is expected to return to a sustainable growth path with price stability in the longer run. having said that, the question we must ask ourselves is : to what kind of growth path should japan ’ s economy return? i would also like to stress the significant importance of serious efforts to raise japan ’ s economic growth rate in the medium to long term – beyond the cyclical economic recovery. ii. efforts to address medium - to long - term challenges even before the earthquake, the great challenge for japan ’ s economy was to raise its growth potential amid a rapidly aging population that is unprecedented in other countries. now, the task of rebuilding and revival following the disaster is added to the list of challenges. in the meantime, we cannot stop ongoing structural changes in the global economy, such as economic and financial globalization as well as emerging economies catching up. what i would like to emphasize today is that, even when doing our utmost to overcome the disaster, we should not retreat from efforts to address the medium - to long - term challenges that have

underwriting of government securities in the 1930s, when mr. takahashi was the minister of finance. this started as “ temporal ” but it soon became impossible to put a brake on the increase in the amount of underwriting and the associated expansion of currency issuance, which ultimately resulted in serious inflation. we need to reflect on this history. there are some counterarguments that, if underwriting creates such a problem, the bank could purchase government securities from the market instead. the bank currently purchases a large amount of government securities, but its purpose is to stably provide the markets with funds corresponding to increasing demand for banknotes, in association with economic growth. if the central bank ’ s purchases of government securities are considered to be conducted with the aim of facilitating government financing beyond its original purpose, this will cause the same problem as underwriting. iii. the bank of japan ’ s response lastly, let me explain the bank ’ s response following the earthquake. a guiding principle for a central bank ’ s actions after a major disaster such as we suffered is very clear. that is, to maintain the functioning of payment and settlement systems as well as ensure the stability of financial markets. in other words, to prevent financial shock from developing into economic instability. the initial task the bank worked on following the earthquake was to maintain the functioning of settlement and financial systems, which are the basis of people ’ s lives and economic activity. at the time of a crisis, the most important responsibility for a central bank is to firmly secure the financial infrastructures. specifically, the bank did its utmost to provide cash to meet the needs in the disaster areas through its branches and offices in sendai, fukushima, and morioka. in the week after the earthquake, the bank provided 310 billion yen in cash to the tohoku region, about three times more than in the same period last year. meanwhile, bis central bankers ’ speeches japan ’ s major payment and settlement systems, including the bank of japan financial network system, or boj - net, have maintained stable operations. needless to say, the bank ’ s actions alone could not secure the smooth operation of payment and settlement systems. such a level of operation became possible because many of the parties involved, including private financial institutions, have made thorough preparations for business continuity risks in normal times. despite devastating damage to their offices, financial institutions in the disaster areas have maintained or resumed business operations at teller windows through strenuous efforts, by utilizing temporary offices and also