Concerns over deflation in the United States are not yet as high as those in the euro area, but I consider it necessary to keep in mind the risk that not only short-term inflation expectations but also medium- to longterm expectations for the United States might decline given that the actual inflation rate has recently been below the level in the Federal Reserve’s outlook, partly due to the declining trend in energy prices brought about by the so-called shale gas revolution.
Having RTGS for domestic transactions is, however, a necessary step toward tackling this. We’re currently investigating the extent of Australian banks’ settlement risks in their foreign exchange business. This is the next major frontier for risk reduction in banking. Operational risk and Year 2000 As their business becomes more complex and diverse, banks are increasingly reliant on computers for information-processing and control.