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,

, in international discussions following the global financial crisis, there were divided views. one view was that it was necessary to identify financial imbalances in advance as early as possible and address them. the other view was that it was difficult to identify such imbalances in advance, and therefore it was enough to address them after the bursting of a bubble actually occurred. that division suggests the difficulty in policy judgment and communication mentioned in the first and second issues. at present, many countries design their institutions and policy frameworks with the intent to work to identify financial imbalances as early as possible and take action, although there is some degree of difference among countries. third, it is also difficult to find a way to prevent the leakage of policy effects. regulatory arbitrage is one example. even though regulated banks reduce their lending in response to certain measures, policy effects could be offset if reduced lending amounts are provided instead by non - regulated financial institutions such as shadow banking institutions. the same was true for japan ’ s quantitative ceiling on banks ’ real estate loans, which i mentioned earlier. if regulations are to be imposed on a wide range of shadow banking institutions to minimize the leakage of policy effects, cooperation among several other authorities is considered to be necessary. without full cooperation, policy effects might be diminished. there also could be a vicious cycle in which advancements in financial technology give rise to new financial products that are not subject to regulation. the authorities will respond to that by expanding the scope of regulation, but other new products will still emerge. in the future, it may become necessary to facilitate international regulatory coordination under free capital mobility. ii. the bank ’ s initiatives on the macroprudential front with those three issues in mind, i will now elaborate on the bank ’ s initiatives on the macroprudential front. in japan, reflecting the emergence of the asset bubble in the late 1980s and its subsequent bursting, a number of measures were taken from the late 1990s to the early 2000s. those measures include the establishment of the financial services agency ( fsa ), the amendment of the bank of japan act with a clear statement of its on - site examinations, and the formulation of a crisis management framework. at present, on the basis of those, the fsa – which is legally authorized to conduct industry - wide supervision and inspections – and the bank – which contributes to financial system stability, such as through the “ lender of last resort ” function – take the initiative in carrying out macro