are diversifying their needs for payment and settlement services in light of rapid progress in information technology. in order to respond to these wide - ranging needs of end users, it is important that we take measures to improve the efficiency and convenience of these services while maintaining their safety. in overseas economies, we have witnessed that their payment and settlement systems are making some improvement. major central banks have substantially extended the operating hours of their payment and settlement systems since the beginning of the 2000s. moreover, in the united kingdom, bank transfers have become available 24 hours a day, 7 days a week on a real - time basis since 2008. in europe, a standard format for credit transfers and direct debits became obligatory this august as part of the initiatives taken by the single euro payments area ( sepa ) to make euro payments faster and cheaper. looking at the situation in japan, a similar progress is also underway, including initiatives taken by the japanese bankers association ( jba ) and the japanese banks ’ payment clearing network ( zengin - net ) with the aim of enhancing the retail payment services. going forward, it is important for a wide range of stakeholders to understand overseas developments and take measures as appropriate. ii. role of central banks in payment and settlement systems before discussing the bank ’ s initiatives in light of such circumstantial changes, let me now explain the role of central banks in payment and settlement systems. payment services constitute the core of banking business. as “ the bank of banks, ” this is also true for a central bank, as it plays a pivotal role in payment and settlement systems. moreover, central banks conduct monetary policy and fulfill their policy objectives, such as ensuring financial stability, through the provision of their banking services. in order to implement their policies effectively, payment services and those systems provide vital underpinnings. cpss has been renamed as cpmi ( committee on payments and market infrastructures ). bis central bankers ’ speeches the first role of central banks in payment services is to provide the means of payment with finality. these include banknotes and current accounts held at central banks. in addition, central banks operate interbank payment and settlement systems in order to facilitate smooth online settlements of funds and jgbs between financial institutions. 2 moreover, central banks are engaged in the oversight activities for payment and settlement systems provided by other entities to call for the enhancement of these systems as appropriate while taking account of the balance between safety and efficiency. furthermore, they are involved in such activities

. this is not only a matter of productivity. engaging in a job in which they are valued more highly also raises their degree of happiness. in other words, levels of both productivity and happiness rise at the same time, and so will that of tfp. lastly, let me explain capital input. why is capital input not increasing? this is similar to asking why investment is not increasing in line with profits. reasons for this include low growth expectations, the self - fulfilling nature of growth expectations, and sluggish growth in domestic business fixed investment caused by the strong appetite for overseas for examples of black firms, see konno haruki, burakku kigyo, nihon o kuitsubusu yokai ( tokyo : bunshun shinsho, 2012 ). investment. 13 the latter reflects concerns over a shrinking of the domestic market due to the declining population and the experience of intermittent surges in the value of the yen amid its appreciating trend up until the introduction of qqe. of these reasons, what i think is particularly noteworthy is the self - fulfilling nature of growth expectations. low growth in the past and intermittent surges in the yen will reduce growth expectations and the expected rate of return on investment. therefore, in order for investment to recover, continued high growth and stable exchange rates are vital. from 2012 until today, average annual growth has remained just above 1 percent, the exchange rate has been stable, and investment has been recovering, but most recently we appear to have entered a more difficult phase. this is something i will discuss when talking about recent economic developments later. iv. low interest rates and the profitability of private banks as i have explained, while low interest rates have led to labor shortages and are likely to have contributed to increased productivity and happiness, it frequently is argued that they undermine the profitability of private banks. 14 however, i think that deterioration in banks'profitability actually is caused by the structural problem that they are accumulating deposits despite there being no borrowers. let me examine what would have happened to banks'profitability if the bank did not conduct bold monetary easing, namely qqe. from the time of the introduction of qqe up until february 2019, loans by domestically licensed banks increased by 71 trillion yen while deposits increased by as much as 144 trillion yen. 15 i think that banks typically would react positively to monetary policy that allows them to increase loans by as much as 71 trillion yen ;