The Bank has been stating for quite a while that it “will carefully examine the outlook for economic activity and prices, and, if judged necessary, take policy  4  BIS Review 160/2010  actions in a timely and appropriate manner.” I believe that public confidence in the central bank’s conduct of monetary policy, by alleviating anxiety about a possible economic downturn, will boost the momentum for a self-sustaining recovery in Japan’s economy.
At the same time, structural reforms are as essential as fiscal consolidation efforts and measures to improve the functioning of the financial sector. In the countries most strongly affected by the crisis, noticeable progress is being made in the correction of unit labour cost and current account developments.