I also believe that even greater attention should be given to a risk that the mechanism of maintaining fiscal discipline through interest rates will be impaired, reflecting overly heightened expectations that the stability in the JGB market will be ensured by the Bank’s JGB purchases.
Under current plans, the transition to the new system will be gradual - no U.S. bank will have its capital requirement determined unconditionally by Basel II before 2012 - and implementation will be subject to a number of safeguards. The supervisory agencies are also committed to continued review and adjustment of the system as experience accumulates.