of intra - regional cross - border transactions would broaden and deepen the investor base, contributing to higher resilience of asian markets. the financial markets in asian economies are in various stages of development. this poses a serious impediment to regional integration, unlike in europe, which stands as a forerunner case in regional integration. even so, it is not farfetched to expect a surge of activity in terms of cross - border transactions, once market practices and the relevant laws and regulations are further harmonized. in this connection, one topic which needs to be duly considered alongside the promotion of cross - border trades is payment and settlement systems. central banks, including the bank of japan, are making joint efforts to ensure and enhance smooth cross - border settlements. as part of these efforts, there is ongoing discussion among the asean economies, japan, china, and korea to establish cross - border linkage between the securities settlement systems and central banks ’ payment systems. this would most likely stimulate an increase in capital transactions within the region, as intra - regional cross - border payments and settlements will become safer and more efficient. once this initiative is established, for instance, japanese banks would be able to smoothly and effectively obtain funds in asian currencies on a delivery versus payment ( dvp ) basis against japanese government securities ( jgss ) collateral ( chart 10 ). strengthening the regional safety nets the third way to ensure resilience is to strengthen the regional safety nets. it is especially important to prevent spillover and contagion triggered by a temporary liquidity shortage in terms of the balance of payments or funding by financial institutions. bis central bankers ’ speeches bilateral swap agreements have already been established among the economies in the region to deal with any liquidity crisis related to balance of payments. furthermore, the economies of asean, japan, china, and korea have agreed on the expansion and strengthening of the chiang - mai initiatives, which help finance short - term us dollar liquidity among participating economies ( chart 11 ). preventing liquidity crises among financial institutions is another important task for central banks. the lehman shock and the ensuing global financial crisis reminded central banks around the world of the importance of fostering a sound financial system with a resilient funding environment for financial institutions and deep and liquid interbank markets. we have also observed that banks have been increasingly expanding their presence in other economies in the region. this is one of the reasons why asian central banks are progressively making efforts to enhance environments for the

november 27, 2019 bank of japan economic activity, prices, and monetary policy in japan speech at a meeting with business leaders in hyogo makoto sakurai member of the policy board ( english translation based on the japanese original ) i. economic activity at home and abroad a. recent developments in overseas economies let me start with developments in overseas economies. the global economy has continued to grow moderately, but the pace of growth has been decelerating since the start of 2019. according to the october 2019 world economic outlook released by the international monetary fund, the global growth rate for 2019 is projected to be 3. 0 percent, a lower rate compared to 3. 8 percent for 2017 and 3. 6 percent for 2018 ( chart 1 ). the continued deceleration is mainly due to a significant slowdown and stagnation in world trade volume caused by the intensified u. s. - china trade conflict. this has exerted downward pressure on the chinese economy, which is one of the hubs of global supply chains, and its effects are spreading across the global economy, including japan. looking at developments by region, the u. s. economy has expanded moderately, albeit at a somewhat slower pace. no significant problems have been observed in u. s. economic fundamentals, with solid consumption sustained amid the historically low unemployment rate, and an increase in housing investment mainly due to lower interest rates. the european economy has been in low growth, partly reflecting the effects of the economic slowdown in china, one of the euro area's main trading partners, in addition to confusion over the united kingdom's exit from the european union. emerging economies have shown mixed movements, but in asian countries - - where economic ties with china are deep - - global trade issues have affected production and exerted downward pressure on growth in these economies. given the ongoing u. s. - china trade conflict and heightened geopolitical risks worldwide, it is unlikely that uncertainties regarding the outlook for the global economy will be dispelled soon. some of these regions are proceeding with policy actions amid growing concerns over the outlook for the global economy. for example, additional easing measures have already been implemented in the united states and europe, and economic stimulus measures have been taken in china. these policy actions have been effective in underpinning economic activity to a certain extent ; however, they are not strong enough to outweigh the impact of the u. s. china trade conflict, which has been more extensive and prolonged