yen in 2008, the year of the lehman shock. however, measures include not only the amount of funds supplied but also steps to provide financial institutions with the confidence that they can obtain sufficient funds whenever necessary. for example, temporary measures introduced in response to the financial crisis that continue today include the complementary deposit facility, the acceptance of foreign government bonds as eligible collateral, and u. s. dollar funds - supplying operations. these measures aim to forestall a return of instability in financial markets. 3. providing support to strengthen the foundations for economic growth moreover, in order to strengthen the foundations for economic growth, the bank has been implementing a measure through which it provides long - term funds at a low interest rate to private financial institutions in accordance with their efforts in terms of lending and investment. currently, financial markets and financial institutions have abundant funds, firms have strong cash flows, and households hold an enormous amount of financial assets. nevertheless, the japanese economy has yet to show robust growth, indicating that the issue at stake is not a shortage of funds, but the unwillingness of economic entities to undertake forward - looking spending and investment. underlying this situation is the fact that the decline in the growth trend of the economy has led to a decline in firms ’ and households ’ growth expectations, which in turn gives rise to insufficient domestic demand – the fundamental cause of the current deflation. in this situation, the bank aimed to address the fundamental cause of the current deflation by making use of its function as the central bank and making more funds available to new areas of growth to raise growth expectations. while this fund - provisioning measure alone is unlikely to be enough to raise japan ’ s growth potential, the bank hopes that by acting as a catalyst it will prompt discussions on this issue as well as efforts to strengthen the foundations for economic growth. looking at the outcome so far, i would say that most of the objectives of the fundprovisioning measure implemented in june 2010 have been achieved. many financial institutions nationwide have shown an interest in the measure, and among the 140 financial institutions that applied, more than 100 financial institutions have been selected as counterparties. the total amount of loans provided through the two rounds of loan disbursements carried out by the bank so far is about 1. 5 trillion yen, which is already about half of the maximum amount of loans – 3 trillion yen – to be disbursed under the measure, with a year and a half still remaining until june 30, 2012, when the

let us call it – “ pre - lehman ” levels. expecting “ pre - crisis ” - levels to make a comeback – the time when risk was significantly underestimated – is neither realistic nor desirable. however, sustainable relaxation in the inter - bank money markets requires a sustainable return of confidence in the financial markets. in order to achieve this aim, it is necessary that the process of restoring banks ’ balance sheets continues, supported by public stabilisation funds. emu and the financial crisis for european monetary union, the financial crisis is certainly posing the greatest challenge in its history. when we recently celebrated the tenth anniversary of the single currency ’ s inception, it was often stated that the first ten years of the euro were a success story with regard to price stability, trade and financial integration in europe. however, it was also stated that the years ahead are likely to become even more challenging. one could say that emu is reaching puberty – if you have children, you will know what i mean. nonetheless, the value of monetary union has never been greater than during the financial crisis. try to imagine what would have happened without the single currency! probably, foreign exchange markets within the single market would have been driven by speculative activities. think of what happened in the early 1990s. currency fluctuations would aggravate both the financial crisis and real economic tensions – and do not forget the political turbulence implied by such currency tensions. it has been clear from the beginning of monetary union that there has been a greater emphasis on the responsibility for fiscal policies, wage policies and structural policies, which remains at the national level. in a nutshell, monetary union requires flexible labour markets and sound public finances – this holds true especially during times of crisis. with regard to fiscal policy, respecting the provisions of the stability and growth pact is of the essence. what is needed is a credible and strong commitment to reducing excessive deficits and to returning to the path of consolidation. rising cds premia on sovereign bonds have induced speculation about potential defaults on the part of emu countries. any concerns in this regard are unfounded and only purely hypothetical. while it is in general welcome that financial markets punish unsustainable public finances, it has to be acknowledged that even euro area member states with high yield spreads are currently facing favourable refinancing conditions given the unprecedented low interest rates. it should be emphasised that the “ no - bail - out ” rule, as stipulated in the ec treaty, is an indispen