This is part of the reason why recapitalization of systemically important banks was delayed to the late 1990s in Japan. Such policy procrastination continued in spite of the voluntary curbs on banks’ executive pay and therefore worsened the spiral between the economic contraction and the banking sector problems, making the disposals of bad assets even more difficult.
First, the Bank has been pursuing powerful monetary easing under the comprehensive monetary easing framework implemented in the fall of last year. The Bank has also repeatedly expanded the size of the Asset Purchase Program and intends to proceed with additional purchases of approximately 13 trillion yen over the next year. Second, the Bank has been doing its utmost to ensure financial market stability.