The size of monetary base, that is the sum of cash in circulation and the outstanding balance of current accounts at the Bank of Japan, has posted dramatic double-digit growth on a year-on-year basis to reach almost 17% of GDP. This is the highest level over the last hundred years with the exception of a period during World War II.
A few years after the start of the crisis, assessing the banking sector’s structure and reflecting on how to make banks safer is essential. A coherent approach would contribute to reducing the potential fragmentation caused by different national structural regulations. Nevertheless, the devil is in the detail when implementing such reform, especially because the potential benefits are still untested.