Nakaso considers how policy-makers could respond to low bank profitability
Bank of Japan deputy notes financial stability risks from monetary easing are low at present
Central banks should consider the low profitability of financial institutions when designing macro-prudential policies, a deputy governor at the Bank of Japan (BoJ) suggested on March 21.
Speaking in Stockholm, Hiroshi Nakaso discussed the effects of the BoJ's easing programme on financial stability. He identified the potential for excessive risk-taking in the relaxed financial environment –"overheating" – but also for an erosion of risk appetite in the face of low revenues – "contraction".
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