Since the latter part of last year when stock prices began to fall, the Bank of Japan began purchasing stocks. By partly utilizing our stock purchasing scheme, banks have been reducing their shareholdings, and a couple of major banks have already reduced their shareholdings to below an amount equivalent to Tier 1 capital as stipulated by regulation.
First, let me stress that, as shown by the Bundesbank, the current low real rate of return is not exceptional historically. In fact, the real rate of return on deposits had been persistently negative during previous decades, but savers had not realised it because of higher inflation.2 Second, real wealth can only increase in an environment of sustained growth and price stability.