B. Current Situation and Outlook 1. Current situation The Bank's assessment is that Japan's economy has continued its moderate recovery trend. On the domestic demand side, business fixed investment has been on a moderate uptrend as corporate profits have been at high levels and business sentiment has improved somewhat.
While the regulatory capital requirements ultimately produced by Basel II would be, we believe, considerably more risk-sensitive than the current capital regime, this is not the only capital regulation under which U.S. institutions would operate.