Although Japan registered surprisingly robust growth in the first half, most observers see private-sector demand as still quite weak despite the low short-term rates. Nevertheless, that the Bank of Japan has apparently exhausted its ability to stimulate the economy through conventional policy. This raises two questions.
Between reduction in manpower and expansion of business, the latter is a better option; and banks have to create an environment in which they will be able to ensure expansion of business through more redeployment, more training and better incentives.