ryuzo miyao : eurozone crisis – implications for asian economies initial remarks by mr ryuzo miyao, a member of the policy board of the bank of japan, for the panel discussion at the asian development bank institute, tokyo, 12 october 2012. * i. * * introduction i am honored to be invited to this panel discussion at the asian development bank institute. in discussing today ’ s topic, “ the eurozone crisis and its implications for asian economies ”, i would like to speak briefly about three key aspects. i will begin with reviewing the current eurozone crisis, then consider its implications for asian economies, and lastly i will outline the bank of japan ’ s contribution to regional monetary cooperation in asia. ii. nature of the eurozone crisis i am sure that most of today ’ s audience is already familiar with developments in the current eurozone crisis, but i would like to emphasize two points about the nature of the crisis. the first is that the eurozone crisis highlights the difficulties of so - called monetary union without fiscal union. eurozone countries introduced the single currency, the euro, under the european central bank, while each member country maintains its own fiscal sovereignty. however, there have been ongoing intensive discussions, since even before monetary union began, especially in academic circles, about the necessity for an adjustment mechanism in the form of fiscal transfers, labor mobility etc., if a common currency is to work. thus, the issue of how to manage fiscal policies under a single currency regime is one of the most fundamental and most enduring challenges for the eurozone. second, as long - term interest rates in member countries converged at low levels following the introduction of the single currency, the eurozone enjoyed the benefits of the expansion of trade and investment. at the same time, however, it also gradually accumulated economic and financial imbalances, such as loose fiscal spending and a bubble in the real estate market. because these imbalances were built up over a period of more than a decade following the introduction of euro in 1999, it would not be surprising if it takes a long time for the eurozone to achieve a full recovery. if this is indeed the case, we must be aware that there is a risk of the crisis becoming a severe headwind against the global economy in the longer - term perspective. i will come back to this point later. iii. implications for asian economies it took about 50 years, from the signing of the european coal and steel community treaty in 1951

funds that counterparties receive will be added to the macro add - on balances in their current accounts at the bank duration of fund - provisioning : 1 year, rollovers can be made until the end of the implementation period → effectively, counterparties can receive long - term financing from the bank implementation period : in principle, until the end of fy2030 iii. the bank's monetary policy chart 12 policy actions to conduct further effective and sustainable monetary easing ( from march 2021 ) to achieve the price stability target of 2 percent, it is important to ( 1 ) continue with monetary easing in a sustainable manner and ( 2 ) make nimble and effective responses without hesitation to counter changes in the situation. conduct of yield curve control establishment of the interest scheme to promote lending apply incentives ( linked to the short - term policy interest rate ) to financial institutions'current account balances, corresponding to the amount outstanding of funds provided through fund - provisioning measures to promote lending ⇒ enable the bank to cut short - and long - term interest rates more nimbly while considering the impact on the functioning of financial intermediation clarification of the range of fluctuations in long - term interest rates ( ±0. 25 % from the target level ) strike a balance between securing effects of monetary easing and maintaining market functioning introduction of " fixed - rate purchase operations for consecutive days " strengthen the fixed - rate purchase operations to stop a significant rise in interest rates conduct of yield curve control for the time being prioritize stabilizing the entire yield curve at a low level under the continuing impact of covid - 19 in particular purchases of etfs and j - reits purchase etfs and j - reits as necessary with upper limits of about 12 tril. yen and about 180 bil. yen, respectively, on the annual paces of increase in their amounts outstanding, and maintain these limits even after covid - 19 subsides purchase only etfs tracking the topix