Although the estimation results should be interpreted with a certain latitude, this analysis suggests that (1) QQE has strongly stimulated economic activity and prices through, for example, a decline in interest rates, and (2) without QQE, it is highly likely that the current situation where Japan's economy is no longer in deflation could not have been achieved amid a continuous shortage in demand.2  2  The simulation shown in Chart 6 is based on a vector auto-regressive (VAR) model consisting of the following variables: the monetary base, interest rates for different maturities, the output gap, the consumer price index (CPI) excluding fresh food and energy, and the foreign exchange rate.
This means to provide the conditions under which capital markets can flourish across the euro area and EU and at the same time, to design a regulatory and supervisory framework under which financial stability risks are under control.