During the deflationary phase in Japan, both the natural rate of interest and inflation expectations seem to have declined. While coping with the aftermath of the burst of the asset bubble, many economic entities such as firms and financial institutions were slow to respond to drastic changes in the economic environment such as globalization and advances in information technology.
In addition, we have made important progress in the resolution of high-risk institutions in a smooth and orderly manner, so as to maintain the order in the financial market. Going forward, we will continue to improve the financial risk prevention and management system to keep pace with further opening-up.