In order for Japan’s economy to return to a stable growth path, exports must rise, and thus developments in overseas economies hold the key. B. Overseas economies  1. Europe  Economic activity in the euro area deteriorated due to the European debt problem that engulfed Greece, Portugal, and Spain.
Looking forward, new mechanisms should be devised to ensure that banks accumulate resources in good times to cushion the shock when the cycle turns. Measures could include requiring banks to hold additional capital and liquidity buffers and introducing dynamic provisioning systems that require banks to build up a general reserve that can be drawn on in downturns.