In the Heisei economy that marked its start in January 1989, one problem after another has arisen, many of which are of a sort that has never been seen before. I would like to give an overview of the economic policies of this Heisei period divided into five periods.
　The first period is from 1989 to the early 90s when the bubble collapsed and so called "lost 20 years" started. Japanese asset prices (stock and land prices) fluctuated wildly, with a dramatic rise in the late 1980s followed by a dramatic decline. These developments comprise the so-called "birth of the bubble" and "collapse of the bubble."
　As the bubble burst in the 1990s, economic performance began to deteriorate. After 1992, when the economic downturn trend became prominent, economic stimulus from both fiscal and financial sides were carried out. As for fiscal policy, economic measures have been repeated almost every year since 1992. As for monetary policy, monetary easing started in July 1991, and the official discount rate was successively reduced. In spite of these policies, the slump in the Japanese economy continued and it slid into the situation described as the so-called "Lost 20 years."
　The second period was the late 1990s when the financial crisis occurred and deflation began.
　The Hashimoto Cabinet which started in January 1996 devoted its energy toward structural reform such as administrative reform, economic structural reform and financial system reform. As for fiscal reconstruction, the consumption tax rate was raised from 3% to 5% in April 1997, and the Fiscal Structure Reform Act was enacted in November. However, the course of fiscal reconstruction is frustrated by the Asian currency crisis and the Act was suspended under the Obuchi Cabinet, which took over the Hashimoto Cabinet.
　Due to the Asian currency crisis which started in 1997, the financial condition of financial institutions further deteriorated, and in November, Sanyo Securities, and the financial institutions such as Hokkaido Takushoku Bank and Yamaichi Securities continued to collapse. The government took measures such as injecting public funds, but since October 1998, the Long-Term Credit Bank of Japan and the Nippon Credit Bank went bankrupt. A scheme has been established that allows large-scale public funds to be invested in financial institutions. These moves were just barely in time to avert crisis conditions for Japanese finance
　The third period was the first half of the 2000s when structural reform and non-performing loan disposal was implemented by the Koizumi Cabinet.
　The structural reform under the Koizumi Cabinet, which was launched in April 2001, was under the slogan"from the public to the private" and "from the government to the regions."
　The Koizumi aimed at reducing non-performing loans held by major banks, and called for strict measures at these institutions. Under these policies, the issue of the non-performing loans that had been a drag on the Japanese economy was finally and largely resolved.
　To cope with deflation, the BOJ lowered the official discount rate nine times to reach the unprecedented low level of 0.5% by September 1995. Furthermore BOJ set the overnight call loan rate to 0.15%, gradually bringing the levels down. The result was the call rate stood at around 0.03% after March, making it for all intents and purposes a zero interest rate.
　The policy was briefly lifted in August 2000 in brazen disregard of the government's opposition, but still the deflation continued. Consequently, in March 2001 the BOJ implemented a quantitative easing policy as a measure that went even farther beyond the zero interest rate policy. This changed the operational objective of monetary policy from call rates to the BOJ's current account balance. It served to increase the amount of those current accounts to around ¥5 trillion through the purchase of long-term government bonds. Furthermore, this market adjustment would stay in place until the rate of increase in the consumer price index remained stably at not less than zero. This was referred to as the "time-axis effect".
　Furthermore, starting in October 2010 the BOJ also responded with a comprehensive easing policy. This policy called for the purchase of exchange-traded funds (ETF) and real-estate investment trusts (J-REIT). Thus, monetary policy had entered unprecedented realms.
The fourth period was the late 2000s and early 2010s when economy was shaken by the Democratic Party administration and the Lehman Shock.
　The Democratic Party made an array of pledges in its election manifesto such as providing allowances for children, creating a system for protecting individual farmers, and making highways toll-free, but when it came to the necessary financial resources the only decision reached was to put something together by "eliminating wasteful uses." After all the government could not guarantee sufficient financial resources and it wound up accumulating a considerable deficit.
　The Lehman shock occurred just before the start of the Democratic Party administration. Sub-prime loan related securities were thrown out and funds were canceled one after another as subprime loans were unable to be repaid. This disruption spread to financial institutions, and in September 2008, Lehman Brothers, the fourth largest investment bank in the US, finally broke down. This triggered simultaneous stock drops around the world and massive turmoil in the financial markets.
　When the Lehman Shock first occurred, it was thought that its impact on Japan would be limited. However, the fall in growth rates that occurred in Japan was considerably larger than that of US. This was due to the fact that the global financial crisis blunted world trade, which in turn caused a major downturn in Japanese imports and exports.
The fifth period is after 2012 when Abenomics develops. Prime Minister Abe promoted his economic policy as a top priority. That policy came to be referred to as "Abenomics," and while it has gradually changed shape it remains in place today.
　The Abe Cabinet made overcoming deflation its overriding imperative. To accomplish this task, the prime minister came up with "three arrows" in the forms of "bold monetary policy," "flexible management of public finances," and "a long-term strategy for stimulating private investment."
　 Monetary policy was the centerpiece of Abenomics. The first of those was the application of "inflation targeting." In January 2013 , the government and the BOJ issued a joint statement declaring an inflation target of a 2% rate of increase in the consumer price index.
　The second effort was the so-called unprecedented quantitative/qualitative easing plan that began in April 2014 under the new BOJ governor Kuroda. This was an attempt at monetary easing of a different order both quantitatively and qualitatively. With (1) its object of achieving the objective of a 2% rise in consumer prices as quickly as possible though with a two-year time frame in mind, it targeted (2) doubling both the monetary base and the retained amount of both long-term government bonds and ETFs over that two-year period and (3) extending the average current maturity of long-term government bond purchases by double the length or more.
　Third was the negative interest rate policy adopted in January 2016. This is what led the BOJ's monetary policy to being referred to as "quantitative and qualitative easing with negative interest rates."
　After carrying out "comprehensive verifications" with respect to the unprecedented quantitative/qualitative easing policy that had been in place, in September 2016 the BOJ settled on a new monetary policy frame. The new framework called for purchasing government bonds so that long-term interest rate would float around 0%, and continuing to increase the funds in circulation until consumer piece index remained stably at over 2%. For these reasons, the monetary policy would subsequently be described as one of "quantitative and qualitative monetary easing with long-term interest rate controls."
　Since then, the policy scope of Abenomics has continued to expand further. In June 2016, Abe cabinet worked out its "new three arrows" which were "a strong economy that creates hope," "support for child-rearing that weaves dreams," and "social security that is connected to peace of mind."
　This completes a brief sketch of the course of the Heisei economy. As before, numerous issues remain and will persist into the post-Heisei era. Thanks to having pursued a radical monetary easing policy for a long period, the economy is finally in a state that may be termed "not deflation." However, it is not been able to achieve the targeted 2% rate of increase in the consumer price index. Despite the development of successive growth strategies, the potential for growth has not increased. The public finances are still in a critical state, and social security reforms that cannot be avoided for fiscal reconstruction are now being discussed.
　As for the international trade around the world, the trend toward free trade that had once been making progress has greatly abated owing to U.S. President Donald Trump's appearance. In response, Japan demonstrated strong leadership in pushing forward on a TPP without the US (TPP-11). Japan will need to work together with the countries of Europe and Asia to protect the global free trade system.