Adverse effects on financial institutions’ earnings and financial markets  Next, I would like to discuss possible costs associated with the negative interest rate policy. Any policy comes with costs. In other words, there is no such thing as a free lunch.
At that time, Japanese banks held large amounts of stocks on their balance sheets. Therefore, market risk associated with stock price volatility was a major risk for Japanese banks, and the adverse feedback loop of falling stock prices, restrained lending, and a deterioration in the real economy became a problem.