toshihiko fukui : overall review of the bank of japan ’ s conduct of monetary policy statement by mr toshihiko fukui, governor of the bank of japan, concerning the bank ’ s semiannual report on currency and monetary control before the committee on financial affairs, house of councillors, tokyo, 28 october 2004. * * * introduction the bank of japan submitted its semiannual report on currency and monetary control for the second half of fiscal 2003 to the diet in june 2004. i am pleased to have this opportunity to present an overall review of the bank ’ s conduct of monetary policy. i. developments in japan ’ s economy japan ’ s economy continues to recover. overseas economies, one of the factors behind this recovery, are maintaining their expansion, although decelerating somewhat from their high growth so far. in the united states, growth in private consumption has decelerated due partly to the rise in crude oil prices. the pace of increase in the number of employees has also slowed compared with early spring. however, it appears that momentum for economic expansion is being maintained, since corporate profits and business fixed investment have been increasing. east asian economies, particularly the chinese economy, continue growing relatively fast. amid these developments in overseas economies, japan ’ s exports and production have been on a rising trend, albeit at a slightly slower pace, leading to an improvement in corporate profits and an expansion in business fixed investment. this virtuous cycle is a factor behind the current economic recovery. another factor behind the economic recovery is the considerable progress being made in dealing with structural elements such as excessive capital stock, debt, and labor in the corporate sector, and the vulnerability in the financial system, all of which had delayed the recovery of the japanese economy. as a result of the progress in these adjustments, corporate profits have increased substantially and the employment situation has been improving. looking forward, japan ’ s economy is expected to continue recovering with the ongoing expansion of overseas economies and the easing of structural adjustment pressure in japan, although attention should be paid to factors such as the effects of the significant rise in crude oil prices on both the domestic and overseas economies and developments in global it - related demand. on the price front, domestic corporate goods prices have been rising due to the strengthening at home and abroad of the prices of commodities such as crude oil and to the improvement in supply and demand conditions. consumer prices ( excluding fresh food, on a nationwide basis ), in contrast, continue to fall slightly on

months of 2009 amounted to $ 6. 98 billion, representing a yoy increase of 2. 8 percent. together, let us help overseas filipinos and their families put their money to optimal use, so that they can allocate their cash flows not only for consumer goods and leisure but also for smart spending and savings such as education, housing and investments. banks should also explore new products and services for overseas filipinos as well as guide them on the type of savings pattern and investments that are suitable for them. finally, baiphil can help develop teaching modules on saving, investment, and money management for adults and out - of - school youths in cooperation with the bangko sentral and the department of education ’ s bureau of alternative education. i am very pleased therefore that baiphil through president susan uranza, signed a memorandum of agreement with the bangko sentral last week to support our economic and financial education program including our savings promotion campaign which we call “ banking on your future. ” other organizations that have signed up as our partners for this program are the rural bankers association of the philippines, the chamber of thrift banks, the bank marketing association of the philippines and the bankers association of the philippines. the bsp has also set up economic and financial learning centers in our regional offices and branches where researchers can access economic and financial data generated and monitored by the bangko sentral. indeed, the bsp in coordination with the banking sector has taken a proactive stance to institutionalize an inclusive program for the economic and financial education of filipinos anchored on the theme, “ financial education : building blocks for a stronger economy ”. ladies and gentlemen. the bsp recognizes the need to continuously raise the bar of competency for banking professionals. at a macro level, the depth of skills of the entire banking sector workforce will be a crucial factor in building a stronger banking system. in this regard, i recognize that baiphil has been and will continue to provide support in strengthening the human capital base of our banks. the bsp, for its part, will remain committed and continue to craft appropriate monetary policies and banking reforms that will allow our economy to ride out the crisis. we will also move forward with reforms to protect consumers and investors. these initiatives, which we have vigorously pursued in recent years, are instrumental in instilling order and depth in the banking system, ahead of the onset of the global financial crisis. nevertheless, considering all that is happening in the global arena, we