Consumers have been rather restrained in their spending as they have experienced prolonged economic stagnation and the frequent emergence of concerns over financial system stability. Recently, however, there have been signs that consumers’ attitude has become somewhat less restrained. For example, the growth rate of the amount outstanding of banknotes in circulation has been slowing recently.
In the past, the growth in banknotes surged when major financial institutions failed in 1997 and 1998 or when blanket deposit insurance was partially removed in April 2002. This was mainly because people who felt concern over the soundness of banks increased their cash on hand. The recent decline in the growth rate of banknotes suggests that these concerns have been abating.