spreading throughout asia. in addition, asean is accelerating the process for building the asean economic community ( aec ) by 2015. it will be interesting to see how the present banking and other financial services change when a single market for goods and services is formulated in asean. i hope the governors can provide us with insights into developments of the aec. with the globalization of the world's financial markets, large capital flows will continue to have a strong impact on open economies. this holds true for most of the asian economies including the asean. it is, and will surely be, the most difficult task for any monetary authorities to maintain the stability of foreign exchange rates, the free flow of capital, and the independence of monetary policy simultaneously. the answer to this proposition probably lies in the resilience of markets. in order to increase the ability to absorb external shocks from massive capital flows, the priority seems to strengthen the function of foreign exchange and financial markets in the region as a whole. in this regard, frequent exchange of information, deep analysis and concerted efforts by the emeap central banks will contribute to addressing risks and vulnerabilities in the markets. such collaborative actions may cover the roles of the imf, which commits itself to extensive reform to meet new challenges under the leadership of rodrigo. conclusion it is often said that asia is highly diverse in culture, social framework and the stage of economic development. since the asian economies are in many respects very different from the european, we will probably follow our own process for economic integration. in that process, the better functioning of markets through regional cooperation will help provide a better business environment for industries and financial institutions, and lead to more efficient resource allocation. the more - than - ten - year history of emeap itself proves that cooperation based on mutual understanding and respect is possible in any circumstances. i am sure the guest speakers have various opinions on today's topics, and we will be able to appreciate their visions through our stimulating discussions. i would be delighted if this symposium helps you build insights into the dynamism of asian economies and central bank cooperation in the region for the decade to come. thank you.

be a bit technical, the inflation rate based on the cpi that the bank refers to tends to be higher than actual inflation. given this, aiming at zero inflation in terms of the cpi means aiming at negative inflation, in effect. therefore, in order to ensure price stability, the inflation rate should be sufficiently positive. the next point regards securing policy room for the future. the level of nominal interest rates is usually determined in accordance with that of inflation rates. looking at the interest rate levels around 2007, right before the global financial crisis, whereas the policy interest rates in the united states and europe were around 4 to 5 percent with inflation of around 2 percent, the policy interest rate in japan, or the uncollateralized overnight call rate, was only 0. 5 percent with almost zero inflation ( chart 9 ). in response to the global financial crisis, which exerted a significantly negative impact on the global economy, the united states and europe counteracted this shock with monetary easing that pushed down the policy interest rates by 4 to 5 percentage points to around 0 percent. on that occasion, although japan also reduced the policy interest rate to around 0 percent, as the united states and europe did, it was only able to exert limited monetary easing effects of 0. 5 percentage point. as you remember, the real gdp in japan dropped more significantly than that in europe and in the united states, the epicenter of the crisis. this implies the possibility that the fact that japan had less room for policy responses in lowering interest rates became a contributing factor to the severer downturn of the economy. with the level of nominal interest rates being high, japan's economy will have more policy room to mitigate the impact of future economic downturns, or will be equipped with a sort of insurance for sustained economic growth. so far, i have mentioned a bias in price statistics and securing policy room for the future, but these alone do not give a good enough reason why the target level of inflation has to be 2 percent. there are some proposals advocated overseas that the target level of inflation should be 3 to 4 percent in order to further increase policy room, although these proposals themselves do not seem realistic. so, why is 2 percent considered most appropriate? to answer this question, the third reason, a global standard, is key. central banks in major economies are currently conducting monetary policy with the aim of achieving around 2 percent inflation. given this, the bank of japan's monetary policy conduct with