Furthermore, the bursting of the bubble combined with characteristics of the financial system indigenous to Japan - a high proportion of bank lending - caused serious problems that restrained economic activity for a long time, such as the problems of nonperforming loans (NPLs) and firms’ debt overhang.
In its role as a lender of last resort, it may be advisable that the bank abide by rules of liquidity provision strictly oriented toward solvent banks. Also, it is absolutely essential that no pressures be exerted for the ECB to engage in quasi-fiscal operations.