fastest pace. in any event, as factored into the forecasts presented in the outlook for economic activity and prices released in april, the bank has been fully aware that the pace of economic recovery is likely to slow over the second half of fiscal 2010 as inventory restocking runs its course and the effects of policy measures wane. however, it should be noted that in japan, unlike in the united states and europe, balance - sheet adjustments are not weighing on the economy and both financial markets and the financial system are stable. this suggests that an accommodative financial environment has been in place to support the economic activity of firms and households. given this, assuming that overseas economies maintain their moderate recovery, the trend of recovery itself in japan is not likely to be interrupted. on the price front, the year - on - year decline in the consumer price index ( cpi ) reached a record level of 2. 4 percent in the summer of 2009 and has been moderating gradually thereafter. the decline has recently slowed to around 0. 6 percent, if the effects of subsidies for high school tuition are excluded. the pace of decline is expected to continue to slow as the economy follows a recovery path and the aggregate supply and demand balance improves. the outlook i have just described is the bank ’ s baseline scenario for economic activity and prices, but the bank fully recognizes that this scenario contains a high degree of uncertainty. there is increasing uncertainty about the outlook for the global economy, especially the u. s. economy, and the foreign exchange and stock markets have been unstable. there is also a possibility that private consumption and production could decline substantially if the effects of the ending of the boost from the extremely hot summer and the absence going forward of the recent last - minute increase in demand for durable consumer goods such as automobiles are larger than expected. based on these points, the bank deemed it necessary to pay attention to the downside risks to japan ’ s economic activity and prices. medium - to long - term challenge confronting japan ’ s economy i have outlined the current situation of japan ’ s economy. at present, it shows further signs of a moderate recovery. but putting aside such short - term economic developments, what many people see as the greatest problem for japan ’ s economy is that they do not have confidence in japan ’ s medium - to long - term growth potential, or in other words, that they are finding it difficult to envisage a blueprint for growth. in fact, japan ’ s

“ economies of scale ” under technological innovations, new players may become the providers of new services that incorporate financial solutions. moreover, it could be considered that such changes in financial architecture may change the risk profiles of financial systems and infrastructures. commercial banks have long been the main provider of payment services. commercial banks, based on their deposit - taking as the core of their services, have kept on providing both financial intermediations such as lending through maturity transformation and payments services. various financial infrastructures were built around such structure of commercial banking. for example, access to the current account at central banks, including the bank, have been provided primarily to commercial banks and other depository institutions. the risk of “ bank - runs, ” which stems from maturity transformation by commercial banks, has been considered as the main trigger of systemic crisis. reflecting the above, central banks have traditionally been assumed to provide its “ lender of last resort ” function mainly to commercial banks and other depository institutions. since more and more non - financial institutions are providing payment services under “ fintech ” developments and there seem to be structural changes in the supply - side of financial services, however, risk profiles might also change from those originally assumed. for example, it is hard to assume the risk of bank - runs in “ crowd - funding ”, which directly matches demand and supply of funds through the internet, and in remittance services that are fully covered by deposits. deputy governor ben broadbent of the bank of england pointed out in his speech in march the possible shift towards a risk profile that traditional debates on “ narrow banking ” or “ free banking ” suggested due to the application of technological innovation to finance. 1 on the other hand, with the expansion of access points ben broadbent, “ central banks and digital currencies ” ( speech made at london school of economics on march 2, 2016 ). bis central bankers ’ speeches to financial services through the popularization of internet, mobile phones and other digital outlets, there are risks that would require higher attention, such as cyber attacks and hacking against vulnerabilities on information security. iii. bank of japan ’ s fmi policy taking into account the above - mentioned technological innovation, the bank has been actively enhancing the stability and the efficiency of japan ’ s fmis by utilizing various policy tools. they include providing banknotes and boj - net as basic infrastructures to the economy, conducting on - site examination and off - site monitoring of financial institutions, oversight