change the state of financial system competition, and agreement has been reached regarding those steps. however, there are quite a few steps regarding which there is still disagreement, such that the discussions have not yet been exhausted and there remains much work ahead of the formulation of final recommendations. i emphasize that the issues which the bank of israel opposes reflect, from the bank ’ s professional perspective, measures that are liable to negatively impact the public and to serve as a marked risk to the stability of the economy. the committee ’ s recommendations reflect agreements that were reached on important and material issues : bis central bankers ’ speeches separating the two credit card companies from the large banks, while providing proportionate protection to the nascent separated companies ; a more lenient level of supervision over entities that do not take deposits, which will make it easier for new entities to compete with banks ; constructing technological tools for the consumer ( information services and activity initiation ) that will allow simple price comparison ; deposit insurance is a measure that will help small banks compete for additional customers, and strengthen our ability to deal with the next crisis ; completing regulation that will apply to nonbank financing companies ( including p2p ’ s ). supervised companies will be able to be connected to the payment systems. payment services regulation, in accordance with generally accepted principles worldwide with adjustment for the domestic market, and the setting of conditions for access to the controlled payment systems. setting up a committee to monitor the implementation of the recommendations, and to recommend, as necessary, additional steps. advancing the steps on which agreement has been reached will lead to a material change in the level of competition in the financial system, without risking its stability and without negatively impacting consumers. it is important that financial system reforms are made with agreement, as a lack of agreement will hamper the ability to implement the recommendations in practice. we must implement these steps responsibly, with a long term view of the benefit to consumers and the economy. bis central bankers ’ speeches

5 ). therefore, japan ’ s economy looks to be on course toward achieving the 2 percent price stability target, and we feel that developments under our policy are promising. ii. the relationship between monetary policy and the government ’ s growth strategy so, what is the relationship between the bank of japan ’ s monetary policy and the growth potential of japan ’ s economy ( chart 6 )? the japanese government has been pursuing a three - pronged strategy that comprises bold monetary easing, flexible fiscal policy, and a growth strategy that aims to spur private investment. these policies are often referred to as the three arrows of abenomics. the role of monetary policy in this policy mix, in an immediate sense, boils down to overcoming deflation. however, it is also linked to japan ’ s potential growth rate. the relationship between the two can be summarized as follows. the first role of monetary policy in this context, needless to say, is to stimulate aggregate demand through large - scale monetary easing, fill the output gap, and thereby bring japan ’ s economy back to its potential growth path ; in other words, to break the vicious cycle between deflation and recession by overcoming deflation. during the process of the output gap diminishing as a result of qqe, japan ’ s potential growth rate is likely to rise to some extent. the reason is that workers will be able to work more efficiently, and capital investment will increase and technological innovation advance as firms, reflecting the improved business sentiment, become more willing to take risks. however, raising the growth potential further is not the role of the central bank and its monetary policy, but of the government and policy measures it can take, such as deregulation. therefore, the second role of monetary policy is to prepare, by overcoming deflation, the environment necessary for the government to pursue economic structural reforms through its growth strategy to shift the potential growth path upward. bis central bankers ’ speeches unless the economy is more or less in good shape, the government cannot promote structural reforms to enhance the efficiency and dynamism of the economy to raise productivity. the reason is that in a deflationary recession there will be strong resistance to the pain that pro - competition policy measures through deregulation might bring. you will have heard of the term creative destruction. when deflation continues, destruction will not be followed by creation. if structural reforms under the growth strategy make progress, these reforms are basically supply - side measures that increase the aggregate supply capacity