Nevertheless, mere suspicion about an erosion of asset quality can be a serious problem if it undermines people’s confidence in the central bank and, in turn, in the national economy. Such loss of confidence could, for example, result in Japan’s commercial banks and firms paying an unnecessary premium when raising funds in other countries.
That is why the Bank recognizes the need to be vigilant against deterioration in its assets. The Policy Board, the Bank’s decision-making body, constantly deliberates whether the various measures implemented to fulfil the Bank’s mission could jeopardize the Bank’s credibility because of the resulting changes in its balance sheet. B.