as mentioned earlier, the bank, with its commitment to achieving the price stability target of 2 percent, is currently undertaking qqe with a negative interest rate to overcome deflation. one of the key elements in our policy is to push up inflation expectations toward 2 percent price stability target and to re - anchor them there. ii. transmission channels of negative interest rate policies a. negative interest rate policy : how it works in practice the other contemporary issue is the implementation of negative interest rate policies ( nirps ) at some central banks, including the bank of japan. nirp has been included most lately in the unconventional policy toolbox. the bank of japan introduced qqe with a negative interest rate in january 2016 by applying a negative interest rate of minus 0. 1 percent to a marginal increase in the current accounts that financial institutions hold at the bank. this new policy measure reduced the marginal funding cost for financial institutions, thereby inducing interbank money market transactions to take place with negative interest rates. the jgb market and other financial markets reacted significantly to the introduction of qqe with a negative interest rate. in particular, jgb yields with long - and super - long maturities saw sizable declines ( chart 4 ). subsequent declines in long - term borrowing costs have stimulated firms ’ demand for long - term funding and households ’ demand for mortgage loans, thereby benefiting a wide range of borrowers. among other factors, new developments in corporate finance are notable as a significant increase in issuance of corporate bonds with a maturity of 20 years or even longer has been observed. as evidenced by the effective implementation of nirps at some central banks, the zero lower bound of nominal interest rates is no longer an insurmountable constraint in practice. competition among financial institutions and arbitrage in money markets stretch the application of negative interest rates into new financial transactions. of course, removing the zero bound does not necessarily mean that central banks are able to cut the nominal interest rate to an arbitrarily negative level. it is natural to assume that another lower bound exists depending on the cost of holding cash currency, although the current level of the negative interest rate in japan, at minus 10 bps, is still far from such a lower bound. even with such a caveat, nirps certainly provide more leeway with central banks in coping with a variety of adverse shocks as a practical monetary policy tool. b. impact of adding a negative interest rate to qqe japan ’ s experience

some farm operations have faced significant financial stress, and it is important to recognize that there are still risks. farmland prices are quite high, and working capital continues to decline. however, returns at banks with a concentration in agriculture have generally remained healthy, as most producers have continued to make loan payments despite weakening revenue streams. let me shift focus now to the role of banks, particularly community banks, in the u. s. farm economy. community banks foster strong long - term relationships with farmers, ranchers, and 2 / 5 bis central bankers'speeches others involved in the local business of agriculture. often, these relationships are cultivated through community bankers ’ service on local civic and business organizations or by participation with local farmers and their families in activities to support the local community and economy. agricultural community banks and agricultural borrowers share a common goal of serving and strengthening their local communities. they are also responsible for providing jobs that maintain the viability of these rural communities. frequently, community bankers ’ ties to local agricultural businesses include running family farms, ranches, orchards, and dairies. in other instances, members of the boards of directors that help to oversee community banks are heavily involved in the business of agriculture. these close connections to local agricultural businesses provide community banks with a unique and important perspective in helping to meet local agricultural credit needs. additionally, community banks can be more agile than their larger competitors, as they employ lenders with a deep understanding of local products and conditions and are able to offer customized funding options in response to changing lending conditions. this agility ultimately allows for better informed lending decisions and provides agricultural borrowers with the means to fund their operations and sustain their communities. as bank supervisors, we pay close attention to the performance of all banks, including agricultural banks. before we start our conversation today, i would like to discuss how the federal reserve approaches bank supervision with a focus on agriculture lending and the challenges our farmers and the community banks that support these operations are facing. overview of agricultural banks there are approximately 1, 400 “ agricultural banks ” in the united states, all of which play a vital role in providing rural producers with access to credit. 6 agricultural banks hold approximately 50 percent of all agricultural loans outstanding at u. s. commercial banks. as i noted earlier, farm income has declined by approximately 50 percent since 2013, yet agricultural loans have steadily increased. additionally, agricultural banks have more challenging funding structures given the seasonal funding needs of their agricultural customers and the difficulty of attracting deposits at rural institutions.