One of the side effects often pointed out is that conducting monetary easing over a long period undermines the functioning of financial intermediation. In this context, the Bank's assessment is that Japan's financial institutions are well capitalized and have ample liquidity, and that financial intermediation has continued to function smoothly.
Along with the other federal banking agencies, we have encouraged banks to work constructively with borrowers who have been affected by COVID-19—offering a customer a responsible loan modification can be a safe and sound banking practice and can help facilitate the economic recovery.