gradual manner. our policy interest rate, the call rate, now stands at 0. 5 percent after being raised twice since the termination of the quantitative easing policy in march 2006. the bank has no plans to abandon this basic idea about the conduct of monetary policy. in other words, while assessing the situation of the economic activity and prices in a forwardlooking manner, if the japanese economy is deemed likely to follow a path of sustained growth under price stability, the bank intends to adjust the level of interest rates gradually in accordance with improvements in the economic and price situation. at the monetary policy meeting in august, we decided to keep our policy interest rate unchanged. the japanese economy is expected to continue to enjoy sustained growth. however, global financial markets have been exhibiting some volatility recently, triggered by the subprime mortgage problem in the united states. although that seems basically to reflect a reevaluation of risk by investors, we believe that the market situation deserves close attention, along with the global economic developments. we will carefully assess incoming economic data and other information as well as the financial market situation both at home and abroad, so as to ensure appropriate policy decisions. iv. challenges facing japan's economy so far, i have explained the path of japan's economy to date, and also our thoughts on the conduct of monetary policy. i hope that the economy will remain on a stable growth path and will be able to match the uk's record 15 - year expansion. however, i am aware that a number of domestic issues, such as the declining birth rate and population aging along with the need for fiscal consolidation, have made some people skeptical about the future of japanese growth. i will use the rest of my allotted time to talk about three issues, and to explain how they are being dealt with. the first issue is the declining birth rate and the aging population. although the problem is being experienced by many leading economies, the situation is especially serious in japan. it is not easy to maintain the pace of economic growth when the working - age population, of those aged between 15 and 64, is decreasing at a rate of nearly 1 percent a year. under such circumstances, society's key task is to bring those members of the elderly and female population who are willing to work into the workforce. firms, as a move toward solving the problem, have been diversifying their employment patterns. as a result of such efforts, labor force participation rates among the females and the elderly are increasing

and enabler for financial inclusion the process of financial inclusion is influenced by both demand and supply side factors. demand side factors include financial literacy and awareness, felt need for the products, credit absorption capacity, etc. on the other hand factors, such as, product availability, delivery methods, service providers, etc. influence the supply side. payment systems have the potential of acting as a catalyst on the supply side of financial inclusion by way of appropriate designing and efficient delivery of products, processes and systems. in one of the recent surveys of the world bank, 1 more than 100 countries reported nearly 170 plus innovative retail payment instruments and methods being used for enhancing financial inclusion. some of the common products involved person to business ( p2b ), person to person ( p2p ) and utility bill payments and a small proportion also reported tapping the payment system for transfer of government benefits. it was observed that innovative payment instruments & methods were drivers of financial inclusion in nearly 14 per cent of the countries surveyed. in sync with the international developments, india has also been witness to some efficient and effective innovations – both in the field of access channels and products. in the payment system landscape of the country, the reserve bank of india acts as regulator, supervisor and, also at times, as a service provider. certain major payment systems initiatives, such as, ecs, neft and rtgs have been game changers that have helped millions of people to use electronic medium for faster transfer of money from one place to another, and, to a large extent, the reserve bank played a critical role in the development of these products. it has, however, been observed that benefits of these facilities have not yet reached the vast segments of the population who are unable to access formal banking channels. the business correspondent ( bc ) based business model using low cost ict has opened up an opportunity for the banking sector to provide appropriate payment system products at affordable cost. the continuous shrinking of prices of ict based solutions can be used to provide the financial services using multiple delivery channels, such as, atms, kiosks, mobile phones, internet and contact and contactless cards through pos. innovations in product design and delivery channels have provided a fillip to the process of financial inclusion and the need for deeper and search for sustainable financial inclusion has paved world bank global payments survey, 2010 bis central bankers ’ speeches way for many innovations. traditional payment services no longer make a business case for large volume of small ticket transactions. this has led to