The abundant liquidity made available by the Eurosystem in December and with the upcoming end-of-month operation, though not a cure in itself, is nevertheless crucial in the present phase. It has averted the imminent risk of an acute funding crisis with repercussions on credit and severely destabilizing consequences; it makes it possible to maintain a high level of financing for the economy.
Under the expanded QQE, extremely accommodative financial conditions will continue to strongly support the virtuous cycle from the financial side. We expect that QQE will produce larger effects as Japan’s economic fundamentals improve.