Overall, prices are expected to follow a gradual declining trend for the time being. Moreover, given the high degree of uncertainty regarding future economic developments, the  1  This report is based on data and information available at the time of the Bank of Japan Monetary Policy Meeting held on December 18 and 19, 2001.
Best-practice banks in the United States have already begun the process of risk-categorizing their portfolios and using historical data to establish internal capital allocations, loan loss reserving, and pricing. Our examiners have been instructed to begin evaluating these systems and urging their improvement.