Today, I will first review economic and financial developments in 2009, then describe the Bank’s thinking on the conduct of monetary policy and conclude with an outline of the challenges Japan’s economy needs to tackle from next year onward. I. Developments in the global economy  I would like to start by discussing global economic developments.
In my end-of-year speech last year, I said that the reason for the recent economic downturn was the bursting of a global-scale credit bubble. The process of the economic downturn may be summarized in the following two factors. The first factor is the unwinding of excess accumulated globally until the mid-2000s, mainly in the United States and Europe.