current situation in and challenges facing the financial system let me next turn to the financial system. for japan ’ s economy to achieve sustained growth, it is critical to enhance the functioning of financial intermediation, through which the financial system supports the economic activities of firms and households, while also maintaining the stability of the financial system. in what follows, let me explain the current situation in and challenges facing the financial system in terms of its stability and functioning. at present, there are no significant problems concerning the stability of the financial system. japanese financial institutions as a whole have a sufficient capital base, and even if there should be a large domestic financial or economic shock, the likelihood that financial intermediation will be significantly impaired is very small. however, at the global level, following the experience of the global financial crisis, there have been calls to prepare for potential risks in international financial markets and the financial system in order to prevent any shocks from spreading. against this background, requirements of financial institutions to ensure their soundness and improve their business bis central bankers ’ speeches management have become more stringent. both international financial regulations such as basel iii and national regulations have been successively introduced and implemented, and discussions have been ongoing that could lead to internationally active financial institutions being required to hold more capital. the bank of japan is deeply committed to the aims underlying this review of international financial regulations, namely, to further strengthen the soundness and business management of financial institutions and to further enhance the stability of the financial system. at the same time, if such regulations excessively constrain financial institutions ’ activities, this might hamper the smooth transmission of monetary policy effects or weaken the ability to provide support to the economy from the financial side, which warrants due consideration in designing specific regulations. in addition, the fact that institutions and circumstances surrounding the financial system differ across countries should be borne in mind. the bank will actively participate in international discussions so that these will lead to the formulation of appropriate regulations taking account of the aforementioned considerations. let me next touch on the functioning of the financial system. with economic activity and prices improving, firms ’ demand for funds has also been increasing gradually and become more widespread in terms of industries and regions, and financial institutions are trying to actively respond to such demand. in this respect, we at the bank judge that the financial system has been functioning steadily to encourage economic recovery. at the same time, the financial system is expected to play a more important role in supporting firms ’ and regions ’ initiatives to

##s and prudent monetary policy. so, how does one celebrate the life of a globally respected and celebrated statesman? there is such a rich history to the story of nelson mandela, as told in his own words in his bestselling book long walk to freedom, that the sarb has had to use our full range of banknotes as well as a commemorative r5 circulation coin. the banknotes highlight president mandela ’ s historical journey from the rolling hills of the eastern cape, to soweto, to howick, to robben island, to the union buildings. the page 3 of 4 commemorative r5 circulation coin features a portrait of tata madiba, smiling at the nation he helped to build. nelson mandela ’ s life has touched all of us : south africans from all walks of life, rural and urban. what could be more fitting than to commemorate his life through an instrument that we all use every day? money touches all of us, young and old. tata represents the best version of ourselves as south africans, and there is no more appropriate an occasion than his birthday centenary to honour all that he represents with these commemorative banknotes and r5 circulation coin. when a young girl in mvezo or a pensioner in soweto carry a r10 or r20 note to buy a loaf of bread, they should know that those two banknotes will change hands more often than all the other banknotes in south africa and in some of our neighbouring countries. one banknote touches many lives. by drawing strength from our fellow south africans and identifying those traits which best reflect the madiba in me, we will remind ourselves in the words of nelson mandela that, : “ we are together in this. our human compassion binds us, the one to the other – not in pity or patronisingly, but as human beings who have learnt how to turn our common suffering into hope for the future. ” finally, if you have not already done so, i would really like to encourage you to walk around the exhibit outside, which reflects on the images on the banknotes and coin. i also hope that you will take the time to download the currency mobile app from any of the mainstream app stores and that you will use this app to empower yourself by learning about the interesting facts and details of our banknotes. thank you very much. page 4 of 4