In relation to financial regulation and supervision, the banking sector is in the middle of a multiyear transition to higher capital requirements, reduced leverage and increased balance sheet liquidity.
The amount outstanding of funds in the call money market has remained generally stable. Interest rates on term instruments have weakened somewhat. The Japan premium remains negligible. Yields on long-term government bonds once rose above 1.8 percent in mid-April but then declined and are recently moving in the range of 1.7-1.8 percent.