How to Create a Recovery through ‘ Quantitative Monetary Easing

(1) The necessary condition for an economic recovery is the new creation of purchasing power. Non-performing loans form an obstacle to the banks’ ability to create this purchasing power, and this is the root cause of the recession. (2) At the present time the central bank alone is able to increase purchasing power. It is necessary that it engages in open market purchases of assets and active foreign exchange intervention without sterilisation operations. (3) The present recession provides a new opportunity for the speedy development of structural reforms, implementation of which should enable Japan’s long-term growth rate to rise to 4%.