year. more specifically, before the bank considers terminating quantitative easing, certain conditions must be met : the core cpi inflation has been positive over a few months and it is forecast to remain positive in the future. as for the inflation forecast, the semiannual outlook report at the end of april shows that the board members ’ median outlook for the core cpi for fiscal 2004 is – 0. 2 %. although the narrowing output gap and the lagged effects of a rise in commodity prices will contribute to moderating cpi deflation, they will not be strong enough to make year - on - year cpi firmly positive for fiscal 2004. i believe that sustained reforms in both the private and the government sectors, together with the bank ’ s commitment to keep monetary easing, will help the economy gather momentum, which in turn will lead to a better possibility that deflation comes to an end. iii. longer - term issues for the japanese economy despite the encouraging short - term outlook, the aging and declining population is a source of concern for economic growth in the long run. any attempt to address this concern would cause a conflict of interests with regard to income transfer and risk sharing. how to deal with this type of conflict is a particularly daunting challenge. challenges arising from population aging let me explain how serious the demographic change is in japan. as is shown in chart 6, japan ’ s population is expected to start declining in 2007. moreover, the share of elderly people of 65 and older has been increasing since around 1990 and is now approaching 20 %. in 2050, the share is expected to reach 36 %, the second highest in the world after spain. not only is the share among the highest, but the rising pace of the share is unparalleled. there are calculations by the united nations as to how many years it takes for the elderly people ’ s share of each country to double from 10 % to 20 % : 42 years for spain, 70 years for germany, 75 years for the united kingdom, but only 21 years for japan. the rapid population aging will certainly have significant impacts on the economy. first, the labor force will decrease. according to the bank ’ s research staff, assuming that the labor participation rate at any given age stays constant, the decline in the labor force caused by the demographic change will pull down the economic growth rate by 0. 5 % in the 2010s. the second impact of population aging is on the savings rate. chart 7 illustrates that the household savings rate in

to by anti - globalization movements. just as a degree of stress is useful in maintaining our personal health, uncertainty will act as a brake on our unwarranted optimism or complacency. nevertheless, that is true only up to a point. if everyone is saying, as in today's financial markets, that the only certainty is uncertainty, it is not difficult to imagine that decision making is becoming increasingly difficult for economic agents. the importance of multilateral cooperation as the world becomes more and more fragmented and uncertain in a mutually reinforcing cycle, we must maintain the stability of the global financial system in the face of inescapable international flows of capital. for this purpose, economies must overcome their narrowly - defined self - interest so as to cooperate and coordinate from a broader perspective. this is to mitigate to some extent the so - called financial trilemma, through multilateral cooperation, and it requires a well - functioning institutional framework such as the imf, multilateral development banks ( mdbs ), and the g20. 9 the financial reforms that i have referred to earlier would not have been possible without confidence building among stakeholders through various international fora, including the g20, the financial stability board ( fsb ), and the iif. since the iif came into being in the first half of the 1980s, its membership has expanded more than tenfold and now covers more than 70 economies. this underscores the fact that financial institutions were both the driver and beneficiary of globalization. building on the experiences of the most extreme financial crisis of the last decade, central banks around the world have strengthened their defenses against acute liquidity problems involving foreign currencies, through cooperative measures such as multilateral swap lines. obviously, reinforcing the safety net like this takes into account the fact on the ground that financial institutions now operate more broadly and deeply across borders. for the last 30 years, the world economy was engulfed by a strong homogenizing current of globalization. having said that, i must also note that every trend has an inflection point. as polarization and fragmentation are becoming more evident, globalization may have reached a turning point of sorts. i would thus like to conclude my remarks today with the sincere hope that every one of you gathered here in this room, who are the leaders in international finance, will continue to play the role of inspirators regarding the direction of the global economy. thank you very much for your attention