Transmission Mechanism Distortion and Japan's Quantitative Easing Monetary Policy Ineffectiveness

Commercial bank system is very important in Japan's quantitative easing monetary policy transmission mechanism. Due to the presence of endogenous defect and practical constraint,credit assets of the commercial banks are lack of flexibility on the supply of monetary base of the central bank,so the transmission mechanism of monetary policy is seriously distorted,that means the supply of monetary base cannot stimulate the investment and consumption,leading to failure of the Japan 's quantitative easing monetary policy during 2001 ~ 2006. In 2013,as the core of the Abe economics,Japan restarted quantitative easing monetary policy. Considering that the transmission mechanism of monetary policy is still distorted,so it is reasonable to say the new quantitative easing monetary policy is still difficult to achieve goals.