BIS Review 104/2008  3  Second, from the viewpoint of the conduct of monetary policy in general, the risks that may arise from prolonged accommodative financial conditions warrant attention. Looking back at previous bubbles in financial activities and asset prices, including Japan's asset price bubble, we can see that many have occurred following a period of price stability and continued low interest rates.
It is difficult, however, to recognize the emergence and bursting of a bubble as they happen. Given this, we should keep in mind the view that excessively accommodative financial conditions often cause large swings in the economy after a certain time lag, although such a view may not appear well grounded.