The negative fat tails are due to excessive pessimism while the positive fat tails are due to exuberance. As far as supervision is concerned, it had its own share of flaws in the pre-crisis period. The role of supervision is to ask questions, when things are going very well. When the financial system or individual entities are not doing well, supervisors will obviously intervene.
Now that Japan’s industries are making steady efforts to adapt to a new era, it is also required that the economic policy management of Japan be reformed to suit the times. The Bank of Japan Law is to be reviewed as the first concrete step in the reform process of Japan’s economic policy management.