##b. the exact details of this arrangement are currently being worked out and will be communicated shortly. the sarb, on behalf of the national treasury has conducted a number of special treasury bill auctions to the value of r8 billion over the past few months. furthermore, government bond issuance has increased, while r58, 6 billion of the r153 bond was switched with market participants. the remainder of the r153 bond will be split into three legs on 31 august. the close relationship which the sarb enjoys with the national treasury and the market assisted in the smooth implementation of these transactions. we anticipate that we will continue to enjoy the same level of support going forward. 3. sarb reserves management we have heard a lot of talk about the dual responsibility some central banks might have for monetary policy and financial stability. less remarked upon is the fact that many central banks have become large wealth managers, clearly reflected by the international monetary fund ( imf ) 1 data which show that global reserves have increased from just over usd1, 3 trillion in 1995 to usd7, 0 trillion in the second quarter of 2008 ( global reserves declined to usd6, 5 trillion in the first quarter of 2009 ). along with this phenomenal growth in reserves, came the challenge of finding means by which to achieve higher returns. accordingly, some central banks slowly moved away from traditional asset classes such as treasury bills and public sector bonds to more sophisticated asset classes. needless to say, recent market volatility and credit concerns have exposed central banks to the vulnerabilities and risks which attach to such investment decisions. therefore, the importance of risk management in reserves management has increased exponentially. managers of foreign exchange reserves within central banks have become much more risk - averse since the global credit squeeze started, with safe assets being back in favour. with just over usd34 billion in net reserves, the management of these remains an important function of the sarb. being relatively new in the world of reserves management, the sarb has generally been a conservative manager. in line with most other central banks, the sarb tightened its investment guidelines for the management of reserves so as to avoid any potential losses. the greater portion of funds is invested in “ aa ” and “ aaa ” rated instruments and with similar - rated counterparties. there were no significant currency allocation shifts in the wake of the crisis. however, because the country ’ s foreign exchange reserves are diversified, currency fluctuations have impacted on returns as

takahide kiuchi : the economic outlook and monetary policy speech by mr takahide kiuchi, member of the policy board of the bank of japan, at the japan securities and economics club, tokyo, 26 november 2013. * * * thank you for giving me an opportunity to speak at the japan securities and economics club. today, i would like to talk about the economic outlook at home and abroad and the conduct of monetary policy in japan. i. economic outlook the bank of japan released the latest outlook for economic activity and prices ( hereafter the outlook report ) at the end of october 2013, and presented the following outlook. comparing the current projection with that in the july 2013 interim assessment, overseas economies have been somewhat weaker than anticipated, but domestic demand is expected to be somewhat stronger, partly due to the effects of various economic measures by the government. as a result, the projected growth rates as well as the outlook for prices in japan are expected to be more or less unchanged from the july assessment. as for japan ’ s economy, while exports have been picking up at a somewhat slower pace, domestic demand, notably private consumption, has been firm and overseas economies are picking up moderately. looking ahead, while domestic demand is likely to maintain firmness as external demand is expected to increase, albeit moderately, a virtuous cycle among production, income, and spending is likely to be maintained. as for prices, the year - on - year rate of change in japan ’ s consumer price index ( cpi, for all items less fresh food, and the same hereafter ) turned positive in june 2013 for the first time in 14 months and has recently been accelerating to the range of 0. 5 – 1. 0 percent. the yearon - year rate of increase in the cpi, excluding the direct effects of the consumption tax hikes, is likely to follow a rising trend, reflecting factors such as the improvement in the aggregate supply and demand balance, as well as the rise in medium - to long - term inflation expectations resulting from economic recovery. in the october 2013 outlook report, it is projected to reach 1. 9 percent in fiscal 2015 in terms of the median of the bank ’ s policy board members ’ forecasts. as the background to this outlook for japan ’ s economy and prices, overseas economies have been somewhat weak, but they are expected to pick up gradually, particularly the advanced economies. looking at respective major countries and regions, the u. s. economy has been recovering