Citing the experience of Japan’s quantitative easing policy, Governor Mervyn King (2002) questioned whether the excess supply of money under the zero interest rate policy would lead to the potency or impotency of monetary policy.
9 At the panel discussion of the Jackson Hall Conference in 2005, I gave my answer to this question: under the quantitative easing policy the extent of the zero interest rate was widened to cover the oneyear maturity in tandem with the increasing amount of reserve target from 5 trillion yen to 30-35 trillion yen.