If we revisit the discussions based on the experience of the recent crisis, it can be summarized as follows. First, the complementarity of functioning between banks and capital market is important. While the functioning of corporate bond and CP markets declined significantly in Japan during the crisis, bank lending substituted the financial intermediation function during such phase and underpinned the rapidly deteriorating firms’ funding.
Let me briefly refer to the slight decrease in the interest rate on liquidity bills (LELIQs) in the past few days. Such a drop should not be mistaken as a loosening of monetary policy. It is explained by the drop in inflation and in expected inflation in recent months.