The difference in relative importance of the banking systems and capital markets may explain to a large extent why, in the course of the current crisis, the Eurosystem’s efforts have focused on providing support to traditional banks, while other central banks, such as the Fed, have also extended their support to other financial institutions.
Needless to say, a yen that is strong against the U.S. dollar curtails the profits of exportoriented firms, many of which are experiencing adverse business pressure that is affecting stock prices. As a result, the Bank of Japan is closely monitoring the impact of the strong yen and weak stock prices on the Japanese economy.