What is the Bank of Japan up to?
It has signalled an end to the policy of almost limitless free money. For the last two decades, the Bank of Japan (BoJ) has been fighting to get the Japanese economy moving again. In the aftermath of the 1980s bubble economy, the Japanese banking system was crippled by bad debts as asset prices fell and firms were unable to repay their loans. Banks couldn’t lend, consumers wouldn’t spend and the economy ceased to grow. In 1999, the BoJ cut interest rates to zero, where they have remained almost ever since. In 2003, it backed this up by flooding the banking system with cash in an attempt to get banks lending again – a policy known as ‘quantitative easing’.
