however, was still not easy. Japan gradually established
ample domestic saving rates that enabled high investment rates. Due to limited
opportunities for foreign borrowing, domestic savings and investments needed to be in
balance. Management of the foreign currency reserve and the balance of payments was
still difficult. Until the mid-1960s, Japan was always at risk of foreign currency
shortages under the fixed exchange rate regime. Once the economy picked up, trade
deficits developed, and the government had to cool down the economy by imposing
recessionary policies.