However, despite such extremely ample liquidity provision from the Bank, the lending of commercial banks declined by half a percent a year and money supply grew only 3%. The decline of bank loans compared with the increase in money supply means, on the part of financial institutions, that assets other than loans have been increasing, which turned out to be mainly government bonds.
Despite the increased provision of liquidity by the Bank of Japan to the money market, financial institutions only increased investment in credit risk-free government bonds and lending to firms rather declined.