On the other hand, keeping interest rates at a low level has the side effect that it may impede the functioning of financial intermediation by reducing financial institutions' profitability through the narrowing of lending margins (i.e., there may be a so-called "reversal interest rate" effect, where the impact of low interest rates is reversed).
Therefore, it is important for central banks to conduct monetary policy while taking its impact on the financial system into account. 8  Looking back on the period since the introduction of YCC, Japan's economy has continued to expand at a moderate pace, which implies that, at the least, the necessary degree of monetary easing was maintained.