Neither group of countries could respond to the reversal of capital flows through a devaluation of their currency. Hence, the necessary adjustment to the liquidity shock had to take place internally. The Eurosystem launched massive liquidity assistance programmes. Banks inside the euro area increasingly turned to liquidity provided by the Eurosystem to substitute private capital inflows.
Yields on 10-year Japanese government bonds have risen significantly above their June levels of below 0.5 percent. Long-term interest rates reflect market participants' prospects of the economy. Thus, higher long-term interest rates after June are basically the reflection of improved prospects. Such observation can be reinforced by the simultaneous rise in long-term interest rates and stock prices.