In a speech on 'On Credit Risk Transfer Instruments and Central Banks' Kazuo Ueda of the Bank of Japan said the Bank has been massively increasing the supply of liquidity. The monetary base has risen by 50% and bank reserves have quadrupled during the last two years, with no discernible effects on the general price level. One of the major reasons for this has been the constrained ability of the banking system to respond to massive liquidity injection and low interest rates by expanding lending.

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