The draft accord holds the promise of ensuring that banks will have capital more relevant to their real risks, closing the gap between regulatory capital and economic capital, and eliminating many of the regulatory arbitrage opportunities that exist in the current framework.
As I mentioned earlier, the robustness of Japan's economy has increased, mainly on the back of favorable corporate profits. Nevertheless, the Bank will closely monitor future developments as there is a possibility that firms' and households' sentiment will be affected depending on developments in overseas economies and financial markets. II. Price Developments Current Situation of Prices Next, I will talk about price developments.