fixed - rate full allotment policy is probably the most significant non - standard measure the ecb is implementing. at its latest meeting on 6th october the governing council, in response to a worsening of liquidity tensions in the market, has committed to maintaining the fixed - rate full allotment policy until the middle of july 2012. the fixed - rate full allotment policy has been complemented by 6 - month and 12 - month operations. these operations serve to further reduce the funding risk faced by the banking system over a longer time horizon. they were an important tool following the lehman collapse. whilst in late 2009 it had been decided to phase them out, in august of this year the governing council decided to re - introduce such operations by conducting one 6 - month operation and more recently to allot one operation of approximately 12 - months and one of approximately 13 - months which will reach the beginning of 2013. as a third element of our non - standard measures, the international cooperation of the major central banks has been crucial : especially the swap arrangements with the us federal reserve which have allowed us to conduct fixed - rate full allotment tenders in us dollars which are aimed at repairing impaired money markets in foreign currency. these operations have been instrumental following the collapse of lehman, while during the course of 2010 demand in these operations petered out. as a precautionary measure, the ecb has nonetheless recently decided to re - establish 84 - day fixed - rate full allotment tenders in us dollar, in addition to the 7 - days tenders. finally, our response to the crisis has included an extension of our eligible collateral list. the main aspects of the eurosystem ’ s collateral framework are the following : that we accept a very broad range of eligible assets ; that a broad range of counterparties can participate in our refinancing operations ; that the same type of collateral is accepted in all refinancing operations ; and that we have common eligibility criteria across the euro area, with losssharing in case of a counterparty default. having a framework that already accepted a wide range of collateral before the crisis, which in the case of the euro area is due to the original need to accommodate a very diverse financial system, has served as a key crisis - mitigation tool. especially important is the possibility to increase the liquidity of assets and counterparties in times of stress. it is worth noting that the financial crisis led other major central banks to

although many small firms still see their financial positions as weak, the overall financial positions of firms, including small ones, have continued to show signs of easing. the cpi ( excluding fresh food ) is declining on a year - on - year basis due to the substantial slack in the economy as a whole, but the decline leveled out in august 2009 and the moderating trend of decline has continued. the outlook for the trend change in prices is determined by the aggregate supply and demand balance and the medium - to long - term inflation expectations. it should be noted that, statistically, the year - on - year rate of change in the cpi will decline for a year due to the introduction of subsidies for high school tuition and other policy measures in fiscal 2010, but in assessing the trend change in prices, it is necessary to exclude such one - off factors. in terms of the trend change in prices, with medium - to long - term inflation expectations likely to be stable, the year - on - year rate of decline in the cpi ( excluding fresh food ) is expected to continue to moderate as the aggregate supply and demand balance improves gradually. while i have thus far explained the baseline scenario for economic activity and prices, the bank is also fully aware of the risks concerning such scenario. upside risks to the scenario are developments in emerging and commodity - exporting economies. the robust growth of emerging and commodity - exporting economies has driven the pick - up of japan ’ s economy. if the growth in those economies further accelerates, it will pose an upside risk to economic activity in japan. meanwhile, downside risks, although somewhat diminished, include the possible consequences of balance - sheet adjustments in the united states and europe as well as potential changes in firms ’ medium - to long - term growth expectations. moreover, attention should continue to be paid to various recent international financial developments and their effects. with regard to prices, there is a risk that inflation will rise more than expected in the event of a rise in commodity prices due to higher growth rates in emerging and commodity - exporting economies. on the other hand, there is also a risk that the rate of inflation might decline due, for example, to a decline in medium - to long - term inflation expectations. ii. conduct of monetary policy the bank recognizes that japan ’ s economy is faced with a critical challenge of overcoming deflation and returning to a sustainable growth path with price stability. therefore, the bank has been implementing various measures, taking into account the two factors