Finally in Section 4, I identify the multi-faceted challenges central banks may face as a consequence of carrying out balance sheet adjustments under population ageing, and I explain the Bank of Japan’s policies to tackle these problems. 2. Balance sheet adjustment and the breakdown of the transmission mechanism  Who leveraged during the bubble period?
Japan and the United Sates In order to find out the effect of balance sheet adjustments after the bursting of a bubble, let me first clarify who leveraged during the bubble periods. In Japan, it was the corporate sector, especially small to medium-sized firms, which for the first time gained access to large banks after the so-called financial liberalization (Fig. 2.1).