Of course, as I have previously mentioned, the world’s firms and households are now in the process of balance sheet adjustments. Therefore, the momentum for recovery in the world economy greatly depends on how the balance-sheet adjustments evolve, and Japan will not be immune from the influence of such developments. Consequently, there still will be considerable uncertainty about the outlook.
Especially in the case of small open economies, we need to bear in mind that, if the degree of monetary easing is excessive, the risk that external shocks would trigger sudden capital outflows and currency depreciation is relatively higher. Second, we should strengthen our efforts to reduce the negative impacts of overseas factors on domestic financial stability and economic growth.