uncertainty about the japanese financial system, such as the terrorist attacks in the united states, the military action against iraq, and the decline in japanese stock prices, credit contraction stemming from liquidity concerns has not occurred since the introduction of the quantitative easing framework. and thus, any deterioration of the economy that such a contraction might have caused has been avoided. as described above, even after short - term interest rates had reached the zero bound, the bank did not throw up its hands in defeat but rather continued to make efforts by providing ample liquidity and “ borrowing ” from the effects of future monetary easing. at present, japanese financial institutions are still in the process of improving their soundness, and with the globalization of the economy, progress in it, an extremely rapidly aging society, and an equally rapidly declining birthrate, the economy faces major structural changes. the people of the entire country are struggling to find ways to overcome the difficulties in this unprecedented process of transition. in such a situation, it is natural for the public to have high expectations of the country ’ s central bank. in order to meet these expectations, i am adamant in my determination to duck no challenges, but to put all my knowledge and experience into overcoming these difficulties. ii. issues on further improvements in monetary policy in order to further improve monetary policy, i think it is important to address various issues related to monetary policy and to discuss them thoroughly. some of these issues may fall within the scope of conventional economic analysis and may thus be dealt with using the appropriate analytical tools. other issues, such as defining the purview of the central bank and addressing its position within a democratic society, may however fall outside the scope of conventional economic analysis. keeping these points in mind, i would like to elaborate in what follows on some issues which need to be clarified with regard to the bank ’ s efforts to improve the current quantitative easing framework. currently, a variety of views are held by people outside the bank requesting further monetary easing measures. some of these views are as follows. one view holds that, if the effect of the quantitative easing on the economy and prices is not fairly strong, the bank should increase the provision of liquidity significantly. this view recommends that, in doing so, the bank consider the option of purchasing financial assets whose risk profiles differ from jgbs, and which are not, under normal circumstances, the object of central bank purchases. another view proposes that the bank seek to exert stronger pressure on public expectations by fundamentally changing the

. s. stock market. subsequently, they recovered reacting to the rebound in u. s. stocks and have returned to the level of above 19, 000 yen. in the foreign exchange market, the yen once appreciated to the 101 - 102 yen level against the u. s. dollar at the beginning of the year, but then depreciated and is currently being traded in the range of 105 - 107 yen. with regard to corporate finance, private banks have basically retained their cautious lending attitude. however, constraint that had been caused by severe fund - raising conditions and insufficient capital base has eased considerably. under these circumstances, major banks are gradually becoming more active in extending loans, while carefully evaluating the credit risks involved. however, credit demand for economic activities such as business fixed investment remains weak. in addition, firms continue to reduce debts as part of their balance - sheet restructuring measures. as a result, credit demand in the private sector has continued to be basically stagnant, and thus private banks ’ lending has remained sluggish. issuance of corporate bonds and cp has been steady at present. the growth in money stock ( m2 + cds ) has slowed somewhat reflecting the stagnant private credit demand. in this financial environment, the financial position of firms is easing, and the lending attitude of financial institutions as perceived by firms is becoming less severe. it continues to warrant careful monitoring how these favorable developments in corporate financing environment will affect economic activities.