The monetary base has increased significantly as asset purchases by the Bank of Japan have progressed, and firms’ funding costs have been hovering at low levels. The year-on-year rate of increase in the amount outstanding of bank lending has been at around 2 percent, mainly due to increased demand for working capital and funds related to mergers and acquisitions.
I will then focus on one important operational tool that we are pushing forward at the European Central Bank (ECB) to assess systemic risks: our top-down stress-testing framework.