hoarded cash and deposits ; as a result, the corporate sector has registered a financial surplus. indeed, during the deflation that lasted for some 15 years, firms restrained their business fixed investment and accumulated cash and deposits. consequently, the total amount outstanding of cash and deposits held by the corporate sector reached as high as about 230 trillion yen. this is nearly half of japan ’ s gdp. at the initial phase of getting out of deflation, firms finance their credit demand for working capital and business fixed investment with their cash at hand. moreover, increasing cash flow will be used to repay debts ; thus, none of these lead to a situation where lending by financial institutions simply increases. a pick - up in lending will only start once firms are no longer able to finance their credit demand for inventory investment or business fixed investment with their cash at hand. moreover, during the process of overcoming deflation, stock prices will rise significantly and the markets ’ expectations regarding future interest rates will also go up. under such circumstances, more firms will decide to raise long - term funds from the capital market by issuing new stocks and bonds rather than borrowing short - term funds from banks. this is another reason for the lackluster performance in lending that exists for some time during the initial stages of overcoming deflation. more recently, a typical situation was seen during the recovery phase at the beginning of the 2000s. at that time, bank lending decreased rather than increased for some time after the economic recovery gradually gathered steam, although one needs to take note that the disposal of non - performing loans was well under way and this led to a decline in bank lending. recent developments since end - 2013 show that lending by commercial banks has increased year - on - year and the pace of increase has picked up. compared with the economic recovery phase of the early 2000s, the pick - up in lending during the current economic recovery phase is actually stronger than originally anticipated. d. time horizon of the qqe and further easing next, i will explain the time horizon of the qqe and then touch on the issue of the possibility of further easing. this is a question that has received considerable attention quite recently. bis central bankers ’ speeches after exchanging views with a range of people, i was left with an impression that there is a misunderstanding that the bank will start tightening monetary policy soon after it achieves the price stability target of 2 percent. this might be due to the fact that the message to “ achieve 2 percent in two years ” was

- vis the rest of the world, but its income balance has stayed positive thanks to a positive return differential between its external assets and its liabilities. for some economists, this is the result of the transformation of the united states from world banker to “ venture capitalist ” with a “ leveraged ” position, where fixed - income domestic currency liabilities finance riskier foreign assets taking the form of equity and direct investment [ gourinchas and rey, 2005 ]. the greater ability to issue domestic currency liabilities has another important implication from a macro - financial stability perspective. to the extent that external liabilities are mainly in domestic currency, whereas external assets are denominated in foreign currency – as in the case of equity and foreign direct investment, and often also debt securities – issuers of international currencies tend to have a “ long ” position in foreign currency. as a result, fluctuations in exchange rates tend to produce counter - cyclical valuation effects on net external assets. when the exchange rate appreciates, foreign currency assets shrink in domestic currency terms and as a share of gdp. conversely, following sharp devaluations – often associated with economic and financial stress – the foreign currency - denominated assets grow in domestic currency terms and liabilities are unaffected, improving the overall investment position when it is more needed [ lane and milesi - ferretti, 2005 ]. as an example, after the currency crises in both 1949 and 1967, sterling ’ s status as an international currency – with most of the large overseas liabilities still denominated in pounds – allowed the united kingdom to cushion somewhat the impact of the devaluations [ cairncross and eichengreen, 2003 ]. the issuance of an international currency could potentially also have significant implications for the implementation of monetary policy. let ’ s consider the experience of the euro over the past ten years in that regard. on the one hand, it has been essential for the euro area to have its own monetary policy in order to face idiosyncratic shocks and focus on the maintenance of domestic price stability. this result would not have been possible without the introduction of the euro and the creation of a large internal economic and trade area free of exchange rate risk. on the other hand, the external demand for euro - denominated assets may affect domestic monetary aggregates, complicating their relationship with inflation over the long run. recent ecb staff research shows that it is necessary to place money demand in the