, investment opportunities will increase and the natural rate of interest will rise. as an unconventional monetary policy that contributes to strengthening growth potential, the bank has established a facility called the “ loan support program. ” the facility is composed of two measures. one is the fund provision for economic growth, which provides funds for financial institutions ’ loans and investment that contribute to japan ’ s economic growth. the second is the fund provision to stimulate lending, which provides long - term funds at low interest rates for financial institutions ’ incremental lending, in order to support their efforts to increase lending. the facility aims to promote financial institutions ’ initiatives toward finding demand for funds in high - growth firms and business fields. i would like to add one point here ; namely, that maintaining the natural rate of interest at a high level is also important as a means of increasing the resilience of the economy against various shocks. in that regard, when the natural rate of interest increases sufficiently, the possibility that the policy rate will hit the zero lower bound again declines and the resilience of japan's economy is likely to increase. iii. unconventional monetary policy and global financial markets lastly, as already discussed in this symposium, let me touch on issues that relate to global liquidity and cross - border capital flows. given the wide spectrum of important issues within this set of topics, let me focus on two such issues – taking into account my own experience – as shown in chart 9. unconventional monetary policy and cross - border capital flows first, the relationship between unconventional monetary policy and cross - border capital flows is quite complicated. while this is not new to central banks and related parties, almost all base money provided through monetary policy will be accumulated in the form of deposits with a central bank. even if a country eases monetary conditions, this does not necessarily mean that money being provided directly “ spills over overseas. ” starting from such accumulated base money and changes in demand - supply conditions in asset markets in which the bank conducts purchase operation, the issue is with regard to how financial market participants ’ expectations and transactions will change and how that will affect cross - border capital flows. this process is fairly complicated, and monetary easing does not necessarily lead to crossborder capital outflows. for example, if growth expectations heighten due to monetary easing, there might be capital inflows in search of a high natural rate of interest. importance of international coordination among central banks second, i would like to point out that – also in international

haruhiko kuroda : japan ’ s unconventional monetary policy and initiatives toward ensuring stability of the global financial system remarks by mr haruhiko kuroda, governor of the bank of japan, at the federal reserve bank of kansas city economic policy symposium, jackson hole, wyoming, 24 august 2013. * * * introduction i am honored by the invitation to be a panelist at this traditional policy symposium hosted by the federal reserve bank of kansas city. the global economy is yet to completely recover from the aftermath of the lehman shock, and each country is grappling with its own thorny issues. japan has not been able to escape from a vicious cycle of deflation and stagnant economic activity for the past 15 years and dynamism has gradually vanished from economic activity. for a sustained economic recovery, it is necessary to overcome deflation and turn firms ’ and households ’ actions into more proactive ones. the content of my presentation is described in chart 1 of the handout. i will first outline the “ quantitative and qualitative monetary easing ” ( hereafter qqe ) that the bank of japan introduced in april, and then follow this with the characteristics of the qqe ’ s transmission channels, focusing on the effects on real interest rates and on the natural rate of interest. i will conclude by touching on several issues on the relationship between unconventional monetary policy and the global financial markets. i. unconventional monetary policy in japan outline of the qqe as represented in the wording “ quantitative and qualitative, ” the bank ’ s qqe aims to overcome deflation through both a “ quantitative ” increase and “ qualitative ” changes in the bank ’ s balance sheet. as shown in chart 2, there are three points. first, the bank aims to achieve the price stability target of 2 percent in terms of the year - onyear rate of change in the consumer price index ( cpi ) at the earliest possible time, with a time horizon of about two years. second, as shown in chart 3, in terms of “ quantity, ” through purchases of various assets, mainly japanese government bonds ( jgbs ), the bank aims to double the monetary base in two years from 138 trillion yen at end - 2012 to 270 trillion yen at end - 2014. when looked at in terms of a ratio to nominal gdp, this has already exceeded 30 percent in the second quarter of 2013. although it depends on future growth in nominal gdp, the ratio