However, banks’ net interest margins also depend importantly on the difference between the return on the loans the banks make and the return on their alternative investments in safe assets. When loan demand is weak, forcing banks to hold low-return safe assets instead of lending, net interest margins suffer.
In doing so, the Bank has decided to make public its basic thinking underlying the revision, together with the outline of the revision, to thereby seek the users’ opinions, which the Bank believes is invaluable for the improvement of the statistics.