a short residual maturity. furthermore, in order to ensure the accommodative financial environment, the bank reduced the policy interest rate – that is, the uncollateralized overnight call rate – from 0. 5 percent to 0. 1 percent, which is the lowest level in the world. in order to provide ample liquidity through maintaining the policy interest rate at this low level, the bank also introduced the complementary deposit facility, whereby interest is made payable on excess reserve balances held at the bank by financial institutions. at the same time, the bank introduced temporary measures to secure the stability of the financial system, given that the strains in global financial markets and the subsequent fall in stock prices and rise in credit costs have greatly affected financial institutions ’ intermediary function and financial soundness. such measures include the stock purchases held by financial institutions to help them reduce the market risk associated with stock holdings and the provision of subordinated loans to banks to help them maintain sufficient capital bases. b. completion of measures to address acute symptoms after markets regained stability subsequently, as the economy stopped worsening and headed toward recovery, while financial markets regained stability, the amount of financial institutions ’ bids for central bank funds started to fall short of the offered amount in the bank ’ s outright purchases of cp and corporate bonds. in the cp market in particular, the issuance rates on high - rated cp occasionally fell below yields on treasury bills, which in theory must command greater creditworthiness. furthermore, auction rates on ordinary funds - supplying operations tended to decrease to such low levels that the advantages of the relatively low rates offered in the special operation were eliminated. as a result, the bank decided to end some of the temporary measures adopted to deal with the acute symptoms. for instance, the bank decided in october 2009 to complete outright purchases of cp and corporate bonds, as well as the special operation, at the end of december 2009 and march 2010, respectively. c. measures to address chronic illness, or deflation the bank is firmly committed to continuing its policy of maintaining the extremely accommodative financial environment, given the moderate pace of economic recovery and weak momentum for price increases. in fact, the policy interest rate is being maintained at a low level of 0. 1 percent and the complementary deposit facility remains in operation. furthermore, on december 1, 2009, in order to enhance easy monetary conditions, the bank introduced a new fixed - rate funds - supplying operation against pooled collateral ( hereafter

contraction of financial market activity following the lehman shock in september 2008. at the same time, the bank is putting forward additional measures to dispel “ chronic illness, ” namely deflation. next, i will elaborate on the bank ’ s monetary policy measures implemented since the lehman shock. a. measures to address the acute symptoms, or the rapid financial contraction immediately after the failure of lehman brothers, financial market participants throughout the world became overly cautious about their counterparts ’ creditworthiness, and there were cases where even financially sound institutions found it difficult to acquire funds. during such a rapid financial contraction, which we have described as acute symptoms, a central bank is the sole provider of liquidity. thus, from the day after the failure of lehman brothers, the bank successively injected abundant liquidity into the money market by conducting sameday funds - supplying operations. subsequently, it implemented measures to provide ample liquidity to financial markets, such as increasing the amount of outright purchases of japanese government bonds and introducing u. s. dollar funds - supplying operations against pooled collateral. in japan, it was the cp market that faced a particularly serious shortage of liquidity as market participants withdrew their funds from the market, fearing the risk of corporate failures. firms that could no longer acquire funds through cp issuance flocked to banks for financing. as banks tried to respond to the increased demand for loans, they found themselves unable to afford to supply sufficient funds for small firms or firms with low credit ratings, or for repo transactions. in this way, the liquidity shortage spread to various markets. to address this situation, the bank, in addition to increasing the frequency and size of cp repo operations, introduced outright purchases of cp as a temporary measure. this was a highly exceptional step, in that a central bank took on the credit risks of individual private firms. the underlying objective was to facilitate corporate financing and resolve the liquidity shortage in the cp market by helping to restore confidence in cp underwriting among market participants. in addition, the bank introduced a series of temporary emergency measures to facilitate corporate financing, including : ( 1 ) the easing of the rating requirement for corporate debt to be accepted as eligible collateral ; ( 2 ) the special funds - supplying operation to facilitate corporate financing ( hereafter the special operation ), through which the bank provided longer - term funds for an unlimited amount against the value of corporate debt pledged as collateral at a very low fixed interest rate ; and ( 3 ) outright purchases of corporate bonds with