However, one of the important prerequisites for maintaining high growth is to avoid the formation of a bubble. The authorities in China are well aware of this. I would then like to share my understanding on how the bubble was formed in Japan in the latter half of the 1980s. It was a phenomenon that arose from the complicated interaction of the following factors.
The amendments also enable the lowering of the Statutory Liquidity Ratio (SLR) to the levels below the previous statutory minimum of 25 per cent of net demand and time liabilities of banks – which would further improve the scope for flexible liquidity management.