one of its fundamental roles. as the last topic on the financial system, i would like to comment on the ending of the blanket guarantee on bank deposits scheduled for the end of this march. there is little time left before the ending of the blanket guarantee on bank deposits. i hope that each financial institution will further accelerate the resolution of various business management problems and regain the market's confidence, thereby enabling smooth transition to the limited guarantee system. then, things would go back to the way they should be. conclusion i have talked about the tasks for japan's economy and the thinking behind the policy of the bank of japan. i have to admit that we are still only halfway to the goal of a revitalized economy, and the path ahead will not be smooth. but i am not pessimistic about the potential of japan's economy and its future course in the medium to long term. for example, japan's personal financial assets have reached around 1, 400 trillion yen. as the largest holder of net external assets of 1. 2 trillion u. s. dollars that amount to almost 30 percent of annual gdp, japan is receiving huge investment income from these assets, as a part of japan's current account surplus that amounts to 2 - 4 percent of annual gdp since the 1980s. and i believe we also have ample potential in terms of technical background to cope with new businesses such as ictrelated industries. the purpose of advancing structural reforms is to revitalize such potential so that it materializes in a visible form. in doing so, we have to face a low growth rate, declining prices, and " pain " such as increasing unemployment and bankruptcies in the short term. however, we have to bear in mind that such a painful process is inevitable if japan is to demonstrate its potential and establish a basis for new development in the long run. i would like to conclude my speech by making two important points regarding the conduct of economic policies during the process of structural reforms. first, from the viewpoint of minimizing the short - term pain of structural reforms, it is important to withdraw some positive effects of structural reforms as early as possible by steadily advancing specific measures. and second, since a low growth rate and declining prices would be inevitable temporarily, macroeconomic policies during the period of intensive structural reforms should aim at preventing these from leading to a deflationary spiral. given the relationships between the economy and prices as i explained earlier, the economy can be expected to exit from

on the domestic side, continued attention should be paid to the developments in financial markets such as the volatile movements in long - term interest rates. on the price front, import prices have recently stopped declining, reflecting the uptrend in international commodity prices, especially crude oil prices. under these circumstances, domestic corporate goods prices are more or less flat, which is also partly due to the rise in tobacco tax. meanwhile, corporate services prices continue a year - on - year decrease of slightly over 1 percent. consumer prices also continue to decline, but the year - on - year rate of decrease has diminished to 0. 2 percent due to special factors, such as the rise in medical treatment costs in april in line with the reform of the medical insurance system and the rise in tobacco tax in july. this report is based on data and information available at the time of the bank of japan monetary policy meeting held on september 11 and 12, 2003. the bank ’ s view of recent economic and financial developments, determined by the policy board at the monetary policy meeting held on september 11 and 12, 2003 as the basis for monetary policy decisions. looking at the conditions influencing price developments, the outlook for import prices is unclear at present because it largely depends on developments in the foreign exchange rate. turning to the domestic side, the basic conditions surrounding prices, such as the supply - demand balance in the macroeconomy, technological innovations, streamlining of distribution channels, and pricing strategies of firms, are unlikely to change significantly for the time being. under these circumstances, domestic corporate goods prices are likely to remain more or less flat for the time being. consumer prices are basically projected to continue falling at the current moderate pace on a year - on - year basis, although there are possibilities that the rate of decline may temporarily diminish further depending on future special factors. as for the financial environment, the outstanding balance of current accounts at the bank of japan is moving at the 29 - 30 trillion yen level, as the bank has been providing ample liquidity. under these circumstances, the overnight call rate continues to move at around zero percent. interest rates on term instruments remain steady. meanwhile, interest rates on euroyen futures are recently declining gradually after rising noticeably from late august. yields on long - term government bonds rose rapidly reflecting an improved outlook for japan ’ s economy, and are recently moving in the range of 1. 4 - 1. 6 percent. meanwhile, yield spreads between private bonds ( bank bonds and corporate bonds )