kiyohiko g nishimura : this time may truly be different – balance sheet adjustment under population ageing speech by mr kiyohiko g nishimura, deputy governor of the bank of japan, at the 2011 american economic association annual meeting, panel “ the future of monetary policy ”, denver, 7 january 2011. * 1. * * introduction : population ageing this panel ’ s topic “ the future of monetary policy ” is doubly opportune. firstly, more than two years have past since the immediate fallout of the lehman brothers ’ collapse, giving us time both to look back and to look forward. secondly, we are not yet out of the woods and are still in the process of soul - searching ; pursuing a better understanding of our economic environment and the appropriate monetary policy responses. in this presentation, i will give a perspective that may be different from other panelists : longer - run, more qualitative than quantitative. specifically, to contemplate the future, i start from the fact that we are in the midst of a balance sheet adjustment process after the financial bubble burst, at a time when the population is ageing. this is not the simple balance sheet adjustment of the past, which took place with a growing young population. this is an acute balance sheet adjustment when the composition of the nation ’ s population is rapidly tilting toward the old. this is unprecedented in our modern history of economic growth. this ageing population is the result of people ’ s choices made many years ago when, after the second world war, birth control became possible and substantial medical improvements were reducing child mortality and increasing longevity. these medical advances and the baby boom after the war, together with longer life expectancy, are true blessings for economic growth, bringing what are often called population dividends, with many young workers producing and few old people being supported. however, at some point in time, the trend had to be reversed. the significant point for us here is that the bubble we have experienced has coincided closely with the turning point in these demographic dynamics. population ageing : inverse dependency ratio let me show you some telling figures on the inverse dependency ratio, which indicates how many people of working age it takes to provide for one dependent person. the japanese ratio peaked around 1990, and it was in the very next year, 1991, that the japanese bubble peaked. the peak of the us ratio was between 2005 and 2010, and the peak of the us subprime bubble was 2007 (

the table. india has also voluntarily agreed to reduce the carbon emission intensity of its gdp by 20 - 25 per cent over 2005 levels by 20202. india was one of the early signatories of the montreal protocol on ozone depletion and, as of 1st january, 2010, has completely phased out the production and consumption of ozone depleting substances such as chlorofluoro carbons ( cfcs ) once used in almost all refrigerators and air conditioning systems3 and halons, which were used in fire extinguishers. it remains on track towards complete phase - out of production and consumption of hydro cfcs by 2030. within the country, the government is also consistently making efforts / policies towards ensuring environmental sustainability. this includes policies like joint forest management, green rating for integrated habitat assessment, coastal regulation zone, clean energy drive through eco labeling and energy efficiency labeling, fuel efficiency standards, etc. emissions from the agriculture sector would not form part of the assessment of its emissions intensity. these exclude use of pharmaceutical grade cfcs in manufacturing of metered dose inhalers for asthma and chronic obstructive pulmonary diseases patients. bis central bankers ’ speeches reducing global wastage 14. an integral part of doing business in a sustainable way is to reduce waste and, in the process, decrease operating costs and increase profits. as per estimates4, between 30 to 50 per cent ( about 1. 2 – 2 billion ) tonnes of food produced around the world never reaches a human stomach. while wastage in the sub - saharan africa and south - east asian countries, including india, tend to occur primarily at the farmer - producer end of the supply chain due to inefficient harvesting, inadequate local transportation and poor storage infrastructure, in developed countries such as the uk, produce is often wasted through retail and customer behaviour. surveys also show that in india, at least 40 per cent of all fruits and vegetables are lost between grower and consumer due to lack of refrigerated transport, poor roads and inclement weather. wasting food means losing not only life - supporting nutrition but also precious resources, including land, water and energy. about 550 bn cubic metres of water is wasted globally in growing crops that never reach the consumer. within india, water use efficiency in agriculture, which consumes around 80 per cent of our water resources, is only around 38 per cent, which compares poorly with 45 per cent in malaysia and morocco and 50 – 60 per cent in israel