The primary objective of financial regulation is prudential; it is to protect the savings of ordinary citizens from reckless or abusive management of financial institutions, and to preserve the stability of the financial system. To the extent that ordinary citizens have greater confidence in the safety of their deposits in financial institutions, prudential regulation can contribute to the deepening of the financial system.
First of all, as I discussed earlier, given that shortterm interest rates had declined to zero, the Bank, like the Federal Reserve and the BOE, decided to put downward pressure on long-term interest rates through massive purchases of government bonds.