Thus, the new regulation has been designed to give banks an incentive to further improve their own risk management systems. In general, regulation or supervision of financial institutions should not be conducted by giving institutions detailed instructions in advance on how to act, which proved workable during the crisis mode.
Rather, we should respect the unique management of each bank and back managerial innovations by financial institutions. On-site examinations by the Bank are being conducted with a recognition of the importance of supporting such innovation. B. Financial market functioning and monetary policy  Let me turn to the relationship between financial market functioning and monetary policy.