Growing concerns about the financial condition of Bear Stearns undermined the confidence of its creditors and counterparties and in a few days eroded what it and its regulator had judged to be an ample liquidity cushion.
The second component is the purchase of risk assets, including exchange-traded funds (ETFs). The Bank purchases ETFs so that their amount outstanding will increase at an annual pace of about 6 trillion yen. With a view to lowering risk premia of asset prices in an appropriate manner, the Bank may increase or decrease the amount of purchases depending on market conditions.