However, when the expectation prevails that low interest rates will continue for a long period of time, it is likely to encourage leverage and maturity mismatching between the assets and liabilities of financial institutions. In that sense, I believe that in the conduct of monetary policy central banks also need to be attentive to the accumulation of financial imbalances.
My final point concerns the regulatory and supervisory framework. Looking back at how bubbles are formed, the bottom line is that it comes down to aggressive activity by both borrowers and lenders. Financial institutions’ activities are influenced not only by the expectation that a stable environment will continue but also by incentives created by the regulatory and supervisory framework.