[1] Window guidance involves the use of monetary policy instruments including lending quotas as an informal way to subsidize or regulate the volume of credit in an industry or financial sector.
[6] During Hayato Ikeda's income doubling plan during the 1960s, the Bank of Japan was given "full control" of the monetary instruments in the economy and was fully responsible for the swings in the business cycle during the 1960s to 1970s period.
"[11]The subsequent failure to tame asset inflation, and the ensuing Lost Decades, caused the Bank of Japan to transition from window guidance to other less direct expansionary monetary policy instruments including quantitative easing.
In a similar manner to Japan, liberalization of capital controls has led to a decline in the effectiveness of window guidance,[2][11] resulting in the exponential growth of credit and asset instability.
[15] In the recent 2020–2022 Chinese property sector crisis, the People's Bank of China has attempted to use window guidance in order to support lending amidst a credit crunch.