The article presents the implementation of the Bank of Japan monetary policy after the so-called speculation bubble burst at the beginning of the 1990s. In the aftermath of this burst, short-term nominal interest rates and the inflation rate formation was close to the zero level. The existence of the zero bound below which nominal interest rates cannot fall prevented the Bank of Japan from bringing the reference rate below zero through open market operations. Thus it was impossible to loosen the monetary policy and ensure the economy a stimulus for further growth. The so-called "zero bound effect" occurred, which significantly limited the effectiveness of the Bank of Japan monetary policy during the last 15 years and caused a prolonged stagnation of the Japanese economy.

The article presents numerous - as yet unsuccessful - attempts to overcome the zero bound effect. Specific monetary policy features, objectives and instruments used before and after the Bank of Japan became independent have been outlined. Special emphasis has been put on two types of the monetary policy implemented since the second half of the 1990s - the zero interest rate policy and the so-called relaxed quantitative monetary policy. The article includes an appraisal of the actions taken by the Bank of Japan. This appraisal takes into account the unfavourable conditions under which the Bank of Japan had to conduct its policies and which made it impossible to unblock the transmission channel of monetary impulses from the banking sector to the non-banking sector.