part of february. however, the trend was reversed late in the month, and the yen is recently being traded in the range of 106 - 108 yen. with regard to corporate finance, private banks have basically retained their cautious lending attitude. however, constraint that had been caused by severe fund - raising conditions and insufficient capital base has eased considerably. under these circumstances, major banks are becoming more active in extending loans, while carefully evaluating the credit risks involved. however, credit demand for economic activities such as business fixed investment remains weak. in addition, firms continue to reduce debts as part of their balance - sheet restructuring measures. as a result, credit demand in the private sector has continued to be basically stagnant, and thus private banks ’ lending has remained sluggish. issuance of corporate bonds and cp has been steady. the growth in money stock ( m2 + cds ) continues to slow reflecting the above - mentioned situation. in this financial environment, corporate financing conditions are easing, and the lending attitude of financial institutions is perceived by firms as becoming less severe. it continues to warrant careful monitoring how these favorable developments in the corporate financing environment will affect economic activities.

bank of japan ’ s march report of recent economic and financial developments1 bank of japan, communication, 10 march 2000. * * * the bank ’ s view japan ’ s economy has recently started to improve. the economic environment surrounding private demand continues to improve, as seen in the increase in corporate profits. however, clear signs of a self - sustained recovery in private demand have not been observed yet. with regard to final demand, housing investment and public investment are decreasing moderately. recovery in private consumption continues to be weak through lack of notable improvements in employment and income conditions. meanwhile, business fixed investment, which had been on a downward trend, seems to have almost leveled off. net exports ( real exports minus real imports ) continue to follow an upward trend due to an upturn in overseas economies. reflecting such developments in final demand, industrial production continues to rise, and an increase in corporate profits is becoming distinct. in this situation, corporate sentiment continues to improve. regarding the employment condition, the decrease in the number of employees is slowing. however, the improvements in corporate profits and sentiment have not stimulated business activities of many firms, because these firms still strongly feel that they have excess capacity and employees and that they should reduce their debts to restore financial soundness. in addition, efforts by firms to reduce personnel expenses have prolonged the severity of households ’ income conditions. as for the outlook, public investment is likely to pick up reflecting the progress in the implementation of the supplementary budget for fiscal 1999. this, along with the favorable financial environment created partly by the bank ’ s monetary easing, is expected to continue underpinning the economy. moreover, the positive impact on domestic production of the recovery of overseas economies is likely to continue for some time, having favorable effects on corporate profits and spending, and then on household income and consumption. by contrast, it is highly probable that housing investment will continue to decline moderately. in the corporate sector, restructuring is gradually improving profitability to some extent, and some firms in high - growth sectors are inclining toward increasing capital spending. many firms, however, are expected to maintain a cautious stance toward fixed investment based on their modest prospects for sales. it seems that the appreciation of the yen since the summer of 1999 will have an adverse effect on corporate profits in the near term. in these circumstances, future economic developments still require careful monitoring in spite of the continued improvements in the environment for private demand. furthermore, it is important to promote structural reform in order to facilitate a recovery in