There is also the risk that financial institutions that have problems in terms of profitability or fiscal soundness will make loans and investment without adequate risk evaluation. From financial institutions’ recent move to purchase superlong-term bonds in pursuit of tiny positive yield, I detect a vulnerability similar to that seen before the so-called VaR (Value at Risk) shock in 2003.
In the meantime, because of the decline in the function of the short-term money market, distortion due to the concentration of funds raised in the call market in banks, trust banks in particular, was seen. As a result, investment trusts and other risk-taking market participants have given up on investing in short-term financial instruments, leading to a loss of diversity among market participants.