In the foreign exchange market, the yen surged temporarily in reaction to the rise in Japanese stock prices but is weakening once again thereafter. With regard to corporate finance, private banks are becoming more cautious in extending loans to firms with high credit risks while they continue to be more active in extending loans to blue-chip companies.
In parallel, ample liquidity support to banks in the form of TLTROs/PLTROs has been important to ensure a stable credit flow to the real economy (see Chart 5) But there are clear limits to what monetary policy can achieve in the face of a pandemic that may stretch out.