These major banks were thus able to avoid increasing their reliance on relatively expensive funding through the FX swap market. Bank Debt and Safe Assets One interesting question here is why major Japanese banks were able to pull off such a significant change in their balance sheets in such short order.
Let me reflect on this from the viewpoint of balancing supply and demand of U.S. dollar-denominated financial assets at the macro level. The key phrase is "safe assets." Financial intermediaries perform an important function of investing in risky assets while issuing safe debt. Debt issued by private financial institutions, along with securities issued by governments, constitutes safe assets that are provided to the economy.