Subordinated debt holders would therefore be expected to impose market discipline on the bank that is quite consistent with what bank supervisors are trying to do, including encouraging banks to disclose more information about their financial condition.
The 10-year government bond yield in Japan was less than 1 percent. How could we make additional room for monetary easing? The point was the real interest rate, which is the nominal interest rate minus the expected inflation rate. In this regard, the situation facing Japan, in which expected inflation rates were stagnant, fortunately provided a breakthrough to this question.