Currently, the year-on-year rate of change in bank lending is negative as a result of the sluggish demand for funds. Against this background, the abundant funds supplied by the Bank to financial institutions have been accumulating as excess reserves at the Bank, underlining a growing sense of an abundance of liquidity.
At present, the Bank does not supply funds by setting its operating target at the outstanding balance of current accounts, as was the case with the past “quantitative easing policy”. The Bank, however, is providing a sufficient amount of liquidity to meet market demand, creating a sense of confidence regarding the availability of liquidity.