with asian economies would expand growth frontiers and thus bring about “ win - win ” relationships, which would be beneficial to both asia and the rest of the world. 3. economic development and financial stability in asia asia ’ s strength and challenges in terms of finance next, i would like to talk about the relationship between the economic development of asia, new linkages and the role of finance, which is indeed the main topic of this conference. as mentioned earlier, asian economies recovered relatively smoothly and swiftly after the global financial crisis and remain a driving force of the world economy. as one of the major factors behind the resilience of asia, i would like to point out the overall stability of asian financial systems. in my view, there are three major factors behind such financial stability in asia. first, asia ’ s economic fundamentals are relatively strong. most emerging asian countries have excess domestic savings and their fiscal conditions are also better than those of advanced economies. the external balances of these countries generally remain in surplus. regarding the issues associate with demographic changes, see shirakawa, “ demographic changes and macroeconomic performance : japanese experiences ” ( opening remark at 2012 boj - imes conference ) bis central bankers ’ speeches against this background, capital inflows to asia quickly rebounded after the sudden contraction during the initial stage of the crisis. second, the business models of asian financial institutions are different from those of european and u. s. institutions. in asia, traditional banking businesses play a major role in financial intermediation, and the “ originate to distribute ” business model, which was one of the major causes of the financial crisis, has never been popular. moreover, asian banks ’ exposures to structured products were limited. third, based on the asian experiences of financial crises in the 1990s, many asian countries including japan have already made various efforts to enhance the stability and resilience of their financial systems, such as strengthening banks ’ capital and building financial safety nets. now advanced economies are focusing on “ macro - prudential ” policies. in this regard, some asian economies, based on the experiences of financial crises in 1990, have already made use of various macro - prudential tools such as loan - to - value ratio to curb excessive real estate loans. as such, some asian economies have moved ahead of advanced economies in terms of implementing macro - prudential policies. in spite of their relative stability, asian financial systems also face challenges. one of the policy challenges is to foster

the global crisis was a stark reminder that economic stability and financial stability are inextricably linked, and that pursuing the first without due regard for the second risks publishing the policy rate forecast path corresponding to the central bank ’ s forecasts of growth and inflation helps to communicate both the central bank ’ s prevailing views on the economy and its policy reaction function, which in turn should help policy expectations evolve efficiently as new information arrives. 11. see, for example, m. andersson and b. hofmann, “ gauging the effectiveness of quantitative forward guidance evidence from three inflation targeters, ” european central bank, working paper no. 1098, october 2009 ; c. e. walsh, “ optimal economic transparency, ” international journal of central banking 3 no. 1 ( march 2007 ) : 5 – 36 ; and g. - a. detmers and d. nautz, “ the information content of central bank interest rate projections : evidence from new zealand, ” reserve bank of new zealand discussion paper no. 2012 / 03. level of the neutral rate itself is, of course, subject to some debate. for example, see d. laidler, “ natural hazards : some pitfalls on the path to a neutral interest rate, ” backgrounder no. 140, c. d. howe institute, july 2011. bis central bankers ’ speeches achieving neither. while the primary tools to deal with financial stability are micro - and macroprudential regulation and supervision, it may be appropriate in some circumstances for monetary policy to contribute to financial stability directly by complementing macroprudential policy. 13 more specifically, because the consequences of financial excesses may be felt over a longer horizon than other economic disturbances, the potential may exist for tension between price and financial stability considerations over the typical monetary policy horizon. in current circumstances, the bank may want to set interest rates higher than would otherwise be warranted to bring inflation back to target within the typical six - to eight - quarter time frame. but that flexibility does not exist in a vacuum, and should never be used by stealth. the most recent financial system review elaborates on risks related to household imbalances in canada. their evolution may be a factor affecting the timing and degree of any withdrawal of monetary stimulus. if the bank were to lean against such imbalances, we would clearly say we are doing so, and indicate how much longer we expect it would take for inflation to return to the 2 per cent target. our current guidance is