The first is that the balance-sheet adjustment, which had weighed on Japan’s economy after the bursting of the bubble, ended. In particular, the completion of resolving excess debts at the beginning of the 2000s had a non-negligible impact. The second reason is the long-lasting high economic growth in the global economy (Chart 4).
This positions us well to understand and mitigate the effects of the pandemic – including through monetary policy, macro prudential tools and supervision. Distressed debt A key priority for us is that there are suitable supports in place to help borrowers affected by income shocks caused by the pandemic and that lenders continue to seek to sustainably resolve borrowers’ longer term distress.