In order to maintain confidence in fiscal sustainability, therefore, I believe it is ultimately necessary to ensure fiscal discipline and increase Japan’s growth potential. In order to increase growth potential, a reasonable amount of time is required to implement measures, including economic and fiscal structural reforms. This should be obvious even without reference to the example of Europe.
On the relation between monetary policy and fiscal reform, there are views on one hand that fiscal structural reform cannot be promoted unless deflation is first overcome and, on the other, that further monetary easing – particularly purchases of government bonds – should be restrained unless fiscal structural reform progresses. I support neither of these views.