at which time the number of customers is relatively small, and instead allocated their limited employees to daytime services. even with reduced labor input due to shorter business hours, sales will not decrease so much, thereby lifting firms'labor productivity. of these measures, increasing labor - saving and efficiency - improving investment has certainly contributed to the recent growth in business fixed investment. in addition, from a longer - term perspective, firms'various efforts are expected to play an important role in raising japan's growth potential. in japan, it is essential to raise labor productivity to compensate for the decline in labor force. although this is not easy, firms'increasing efforts of various kinds amid the widespread labor shortage of late have become a driving force toward raising productivity, which is a long - standing challenge to japan's economy. ii. price developments now i will move to price developments. the year - on - year rate of change in the consumer price index ( cpi ) excluding fresh food has increased to around 0. 5 percent recently, but that which also excludes the effects of a rise in energy prices has been relatively weak, remaining at around 0 percent ( chart 8 ). looking ahead, the bank of japan projects that the rate of change in the cpi is likely to continue on an uptrend and increase toward 2 percent. in what follows, let me describe how this process will operate, especially from firms'standpoint. what lies behind the fact that inflation has been relatively weak despite the increase in labor costs is firms'efforts to absorb the costs that i mentioned earlier. specifically, many japanese firms have raised wages for their employees but kept the prices of products and services unchanged, through labor - saving investment and streamlining of their business processes, for example. it often is pointed out that one reason why firms do not raise their sales prices is a kind of caution that, if they raise their prices but competitors do not, they may lose customers and competitiveness in the market. given that their competitors have the same thought, perhaps all the competing firms wait and see what others will do and none make the first move. this strategy itself would be reasonable for firms facing stiff competition. at the same time, however, it also makes it unlikely that firms will raise their sales prices by passing on increased costs to those prices as necessary. what will happen going forward? given that firms have already been working on streamlining their business processes in many ways, it will gradually become difficult for them to continue to absorb increases in

the maastricht framework is the only way forward when it comes to establishing a stable regulatory framework. however, this would mean that the liability principle, too, would have to be strengthened or, to quote otmar issing : “ for a monetary union, in which the countries ( … ) have transferred their monetary policy to a supranational institution, while insisting in all other areas that they remain sovereign states, the no - bail - out principle is the only solution. those who insist on self - determination must bear the consequences of their own actions by themselves. ” implications of the liability principle for reforming the emu framework but how can the liability principle be strengthened and what does “ strengthening the maastricht framework ” mean in concrete terms? strengthening the liability principle essentially means that both governments and banks must continue to take responsibility for the consequences of their actions. this implies that citizens bis central bankers ’ speeches are primarily liable for the public finances of the country in question, and that, secondarily, investors bear the consequences of their investment decisions. i believe, for example, that a european framework which is based on individual national responsibility must first fall back on the taxpayers of the affected country in an exceptional financial emergency of a member state, given that high public debt levels are often associated with significant private net wealth. in order for governments with a waning creditworthiness to gain time to find sustainable solutions for their public finances, it is also important to be able to restructure government debt without endangering the stability of the financial system. introducing collective action clauses for the issuance of sovereign bonds was certainly a step in the right direction. however, the bundesbank believes that additional steps are required. the bundesbank suggested that a clause should be hard - wired into the terms and conditions for the issuance of euro - area government bonds that would automatically extend the maturity of a given country ’ s bonds by three years if that country received loans from the esm fund. automatically extending bond maturities in this manner would buy time for crisis countries to resolve their problems without private creditors pulling their capital out. this would allow a better balance to be struck between liability and control. first, the automatic extension of maturities would cause the volume of financial assistance to decrease significantly. second, sufficient time would be available to determine whether the problem is one of solvency or liquidity, in other words whether a country is permanently or only temporarily unable to obtain funding in the market