that export natural resources will likely remain high and it is also relatively likely that the current phase of slow growth in advanced economies will come to an end and the growth rate will gradually recover. what are the risk factors that may hamper the realization of this main scenario? two major risk factors could be pointed out. the first is the upsurge in commodity prices and the global increase in inflationary pressures. the second is the developments in global financial markets and in the u. s. and european economies under the influence of the subprime loan problem. i will first discuss the upsurge in commodity prices, such as prices of energy, materials, and food, and the global increase in inflationary pressures. the upsurge in commodity prices seems attributable mainly to the sharp increase in demand reflecting high growth in emerging economies and countries that export natural resources, and to the slower growth in production capacity relative to the increase in demand. in addition, speculative or financial factors have been pointed out. although various factors could be thought to have contributed to the actual rise in commodity prices, it seems possible to attribute the trend increase since 2002 basically to the fundamental factor, which is the condition of supply and demand. in the 1990s and in the early 2000s, the inflation rates in advanced economies gradually declined with the formerly planned and emerging economies joining the world of the market economies. during this period, the world economy enjoyed favorable economic conditions of high growth, low inflation, and low interest rates with some differences between countries and times. as the process advanced, however, formerly planned economies and emerging economies increased their presence not only as production bases of labor intensive goods but as huge consumers of materials and consumer products. in fact, in 2007 the demand for crude oil declined 0. 8 percent for oecd countries, which are advanced economies, whereas it increased 3. 9 percent for non - oecd countries. what began as an upsurge in commodity prices including energy and materials is now leading to an increase in overall inflationary pressures. the headline consumer price inflation rates, which include energy and food, are currently around 4 percent in the united states and the euro area, and have increased around 2 percent relative to a year earlier. the u. s. - type core inflation rate, which excludes energy and food, is over 2 percent. in emerging countries, the inflation rates are much higher : in china, it is around 7 to 8 percent and there are a number of countries with double

kazuo ueda : progress and challenges in the asia - pacific financial system keynote address by mr kazuo ueda, governor of the bank of japan, at the 18th asiapacific high - level meeting on banking supervision, tokyo, 6 march 2024. * * * introduction good morning. thank you for participating in the 18th asia - pacific high - level meeting on banking supervision today. it is a great honor to host the first in - person meeting in five years since 2019, here at the bank of japan. in recent years, we have witnessed significant shifts in the economic and financial landscape. these shifts began with the slowdown in economic activity due to the covid - 19 pandemic, followed by subsequent recoveries, heightened geopolitical tensions, and a surge in inflation. despite these challenges, the impact on the financial system in the asia - pacific ( apac ) region has been relatively contained. reflecting on the past quarter century from the year 2000 to the present, even amid the global financial crisis and the european debt crisis, the financial system in the apac region has exhibited overall stability, contributing to considerable growth in the apac economies. i would first like to touch on the characteristics and background of the stability of the financial system in the apac region during the past quarter century. following the agenda of this meeting, i will then talk about the changes in the environment that are crucial for promoting financial stability and the challenges we currently face. i. asian currency crisis and subsequent responses the asian currency crisis, which occurred just before the year 2000, stands out as the pivotal event that influenced the stability of the financial system in the apac region over the past quarter century. the crisis served as a turning point, encouraging jurisdictions affected by it to implement structural reforms with a focus on managing external debt and capital flows. these reforms included improving current account balances, accumulating foreign reserves, increasing net foreign assets, and shifting to more flexible foreign exchange systems. moreover, the lessons learned were widely shared, even among jurisdictions that did not directly experience the asian currency crisis. apac jurisdictions have enhanced the institutional frameworks of the financial system, strengthened financial supervision, and advanced major restructuring among financial institutions. there has also been notable progress in developing frameworks for financial coordination and cooperation within the apac region. with a view to ensuring stability in foreign exchange and financial markets, the chiang mai initiative multilateralisation ( cmim ) was established, a currency swap network that covers