Our general view is that the financial sector has a robust capital base relative to risks taken and its resilience in the face of stress is sufficient, and thus it could undertake positive risk taking and portfolio rebalancing under QQE with a negative interest rate framework. At the same time, we believe that the contraction risk at present is also small.
The extended period of monetary easing has tended to pressure the interest rate margins of financial institutions, negatively impacting their revenue streams (Chart 5).