as mentioned earlier, the bank, with its commitment to achieving the price stability target of 2 percent, is currently undertaking qqe with a negative interest rate to overcome deflation. one of the key elements in our policy is to push up inflation expectations toward 2 percent price stability target and to re - anchor them there. ii. transmission channels of negative interest rate policies a. negative interest rate policy : how it works in practice the other contemporary issue is the implementation of negative interest rate policies ( nirps ) at some central banks, including the bank of japan. nirp has been included most lately in the unconventional policy toolbox. the bank of japan introduced qqe with a negative interest rate in january 2016 by applying a negative interest rate of minus 0. 1 percent to a marginal increase in the current accounts that financial institutions hold at the bank. this new policy measure reduced the marginal funding cost for financial institutions, thereby inducing interbank money market transactions to take place with negative interest rates. the jgb market and other financial markets reacted significantly to the introduction of qqe with a negative interest rate. in particular, jgb yields with long - and super - long maturities saw sizable declines ( chart 4 ). subsequent declines in long - term borrowing costs have stimulated firms ’ demand for long - term funding and households ’ demand for mortgage loans, thereby benefiting a wide range of borrowers. among other factors, new developments in corporate finance are notable as a significant increase in issuance of corporate bonds with a maturity of 20 years or even longer has been observed. as evidenced by the effective implementation of nirps at some central banks, the zero lower bound of nominal interest rates is no longer an insurmountable constraint in practice. competition among financial institutions and arbitrage in money markets stretch the application of negative interest rates into new financial transactions. of course, removing the zero bound does not necessarily mean that central banks are able to cut the nominal interest rate to an arbitrarily negative level. it is natural to assume that another lower bound exists depending on the cost of holding cash currency, although the current level of the negative interest rate in japan, at minus 10 bps, is still far from such a lower bound. even with such a caveat, nirps certainly provide more leeway with central banks in coping with a variety of adverse shocks as a practical monetary policy tool. b. impact of adding a negative interest rate to qqe japan ’ s experience

in implementing macroprudential measures as i mentioned earlier, macroprudential policy aims to ensure the stability of the financial system as a whole by analyzing and assessing risks within that system and formulating, based on the findings, institutional designs and policy responses to mitigate such risks, with particular attention paid to the interaction among the real economy, financial markets, and financial institutions. in view of the experience of the global financial crisis, in addition to the for details, see oscar, schularick, and taylor ( 2011 ). bis central bankers ’ speeches analysis and assessment of risks in the overall financial system, a macroprudential perspective has been actively adopted worldwide in institutional designs and policy responses. for example, countercyclical capital buffers ( ccbs ) are to be introduced, as stipulated in the basel iii requirements. they aim to limit financial institutions ’ excessive risk taking by requiring an increase in their capital at the time of credit expansion. they also are expected to function as a buffer when losses are actually incurred. other types of policy measures aim at containing systemic risk arising from credit expansion and overheating of demand by imposing direct regulations on credit expansion by financial institutions, such as limits on total credit supply, loan - to - value ( ltv ) caps, and debt - to - income ( dti ) limits ( chart 1 ). some countries and regions have already introduced those measures and have produced policy effects. 2 in japan, such macroprudential measures were taken in the past. one example is the quantitative ceiling on banks ’ real estate loans, which was set in 1990 to contain the excessive growth in bank lending to the real estate sector by keeping the growth rate of such loans to a level equal to or below that of total bank lending. regardless of how the ceiling was categorized at that time, it now can be considered a macroprudential measure. 3 the measures i have mentioned so far are regarded as typical macroprudential measures. however, other measures – that is, those which already have been implemented, such as on - site examinations and inspections of individual financial institutions and oversight of payment and settlement systems – should also be conducted, taking into account a macroprudential perspective, in cooperation with the relevant parties. let me turn to the issues regarding the implementation of macroprudential measures. i believe there are three ( chart 2 ). first, it is important to implement – with appropriate timing – policy measures that are considered effective,