Abstract
This paper describes the transmission of the recent financial crisis to Japan and compares the monetary policy reactions by the Bank of Japan (BoJ) with those during the 1990s, and with reactions by other major central banks. The paper first reviews the recent literature on the origins and transmission mechanisms of financial crises. We then consider how the financial crisis was transmitted to Japan and describe the responses by BoJ. The paper then proceeds and analyses the lessons that have been learnt by the BoJ and other central banks from the financial crisis of the 1990s.