Since “safety first” has been the traditional savings habit of Japanese households, an excessive proportion of their savings is held in the form of safe assets, such as bank deposits. For the truly dynamic development of the economy, however, it is crucial that diverse channels of credit provision, particularly financial intermediation through markets, should be fostered.
Financial institutions have already been striving to develop new business models geared toward this end, as well as to improve the functioning of financial markets. If households, which are the ultimate source of savings, remain extremely risk-averse, a significant mismatch in the supply of and demand for savings will emerge.