Japan has not been able to escape from a vicious cycle of deflation and stagnant economic activity for the past 15 years and dynamism has gradually vanished from economic activity. For a sustained economic recovery, it is necessary to overcome deflation and turn firms’ and households’ actions into more proactive ones. The content of my presentation is described in Chart 1 of the handout.
Nagel: Perhaps the turmoil surrounding tapering was even helpful. In what way? Nagel: By reminding market participants not to forget that, sometime in the future, there will be an exit from non-standard monetary policy measures. Cœuré: Yes, it was a useful reminder. Nagel: From time to time we have the feeling that banks are getting too used to these extraordinary circumstances.