There is talk about the “Japanisation” of the euro zone, but we have to keep in mind the many differences that remain between Japan and the euro zone

As the euro zone has low inflation, a very expansionary fiscal policy and a sharp rise in public debt, a monetary policy of monetising fiscal deficits, zero interest rates and the prospect of an ageing population, there is increasing talk of a “ Japanisation ” of the zone. However, there are very significant differences between Japan and the euro zone: Even if interest rates are zero, Japan keeps the savings in the country, particularly in monetary assets, capital outflows are very limited, and the exchange rate is not depreciating. Financial “patriotism” is weaker in the euro zone, which makes it more difficult to maintain a very expansionary monetary policy on a permanent basis; Income distribution is extremely skewed against employees in Japan – as opposed to the euro zone – creating a much stronger deflationary trend in Japan than in the euro zone. This is due in particular to excess corporate savings in Japan and lower medium-term inflation in Japan than in the euro zone.