in large fluctuations in the real economy as the energy price changed. this also caused serious environmental problems, including air and water pollution. in order to overcome these problems, mainly after the first oil shock, japan made strenuous efforts to develop energy - efficient and environmentally - friendly technologies by bringing together both public and private sectors. as a consequence, energy unit efficiency in japan has improved dramatically, and has become the most efficient in the world ( slide 18 ). 3 this has reduced the impact of resource price changes on domestic prices and the real economy while at the same time bringing environmental benefits, as there are now far fewer environmental disruption problems. the asian emerging economies have much to improve in terms of environment, and i think there are many areas in which japan can make a contribution. in terms of cooperation with asia, finance is an equally important area. in fact, one of the recent key strategies for major japanese financial institutions has been the strengthening of their business activities in east asian economies. developing financial markets in the region is also an important policy issue. according to a bis survey as of april 2010, global foreign according to the agency for natural resources and energy of japan, the efficiency of japan ’ s energy consumption has improved by 37 percent during the past thirty years, and as a consequence, its total primary energy input per gdp became the lowest in the world. exchange transactions increased by 20 percent compared with that of three years ago. among them, the share of asian currencies in foreign exchange transactions is only less than 4 percent ( slide 19 ). however, given the significant presence of asian economies in trade in goods and services, this share is expected to increase much further. as such, developing financial markets is important for the asian region. for instance, there are still limits on the number of asian currencies that can be settled via the international foreign exchange settlement system called continuous linked settlement ( cls ). it is also our task to introduce cross - border collateral arrangements in the region that would enable central banks to supply local currency liquidity against collateral which are financial assets in other jurisdictions. in asia, there are distinct international financial markets, including hong kong, singapore, and tokyo. what is expected of the market participants and monetary authorities in those financial markets is to support the overall efficiency and stability of the financial intermediary by being competitive and cooperative with each other. in this regard, i have the deepest respect for one of the hkma ’ s missions to promote and develop hong kong

’ s financial market into an international financial center, and for the innovative policy stance the hkma has taken. v. closing remarks as time is running out, i would like to conclude my speech. the future of the global economy is currently fraught with uncertainty, and we are facing a variety of challenges. for both hong kong and japan, whether our economies will be able to take a desirable path depends significantly on global economic developments. from the perspective of the outlook for the global economy, i have raised three issues today, namely balance sheet adjustments in advanced economies, growth potential of emerging economies, and debates on currency conflict. the exact nature of these issues will change considerably, depending on the policy responses of each jurisdiction. it is therefore important for policy authorities around the world to promote better understanding and to cooperate closely with each other. over the past decades, the world economy and financial markets have in fact been moving steadily towards globalization. however, at the same time, it is also true that we are still far away from perfect globalization. as typically observed in debates on currency conflict, the variety of challenges we are facing may reflect the complex reality of the global economy. nevertheless, we need to make efforts to resolve these challenges. in this regard, the growing number of voices calling for reform of the international currency system seems to me a welcome development. at the same time, however, it is unrealistic to expect that such difficult challenges can be resolved in a short period of time. what is most important at this moment is the sincere commitment of each jurisdiction to learn the lessons of what others have experienced. there is much to be learned from this experience, particularly on issues relating to the formation and the bursting of bubbles, and on policy responses to financial crises. moreover, it is important for us to exchange frank views on the challenges we are facing. while listening to recent debates on currency conflict, i am often reminded of the word “ sympathy ” as used by a great economist adam smith in his first but continuously revised book, “ the theory of moral sentiments. ” what we need most fundamentally at this juncture is “ sympathy ” with each other, in smith ’ s meaning of the term, bearing the situation of other economies in mind. i believe the current “ two - speed recovery ” presents a perfect example of the importance of such “ sympathy. ” we, the bank of japan, cooperating with other central banks and monetary authorities, should put all our efforts into ensuring sustainable economic growth under price