In any case, this back-of-the-envelope calculation underscores the importance of labor productivity in raising the growth potential. Particularly in an economy like Japan’s, with its demographic constraints, policies should have a clear focus on raising productivity growth. Secular stagnation hypothesis What does this slower trend growth mean for central bankers?
Under the current financial architecture central banks issue two sorts of money: currency in circulation in the form of the good old banknotes and coins, and digital money, available as reserve or settlement accounts with the central bank. Accordingly, households and businesses cannot hold claims on the central bank in a digital form. The banks and certain other financial or public institutions can.