Consequences of Monetary Policy Divergence and Regulatory Reforms With the low interest rate environment persisting in Japan and Europe, the United States initiated "tapering" and entered a rate increase cycle. Such a divergence in monetary policy outlook influences the return-seeking behavior of financial institutions and investors.
Against the background of monetary policy divergence between Japan and Europe on the one hand and the 3  United States on the other, the nominal return on U.S. dollar assets is now higher than the return on yen or euro assets, and financial institutions and investors in Japan and in Europe are increasing their investments in dollar assets (Chart 5).