Japanese Authorities Review Progress Toward Resolvability in Japan
The Financial Services Agency of Japan (JFSA), the Bank of Japan (BOJ), and the Deposit Insurance Corporation have jointly published the BOJ Review, which focuses on the resolution of global systemically important banks (G-SIBs) and highlights the progress toward resolvability in Japan to address the too-big-to-fail (TBTF) problem. JFSA also notified about Fintech Cooperation Framework with the Financial Services Authority of Indonesia (OJK). Additionally, BOJ published report on Central Bank Digital Currency (CBDC).
Below are the key highlights of the recent updates
- The jointly published BOJ Review highlights that the authorities reviewed the international and domestic progress to address the TBTF problem over the past decade, and it can be assessed that steady progress has been made toward resolvability, beginning with the establishment of public "orderly resolution" schemes, followed by the developments of internal frameworks in financial institutions, and then addressing the practical issues. The report highlights that the TBTF problem cannot be solved only by improving the effectiveness of the resolution regimes; it is also important to effectively regulate and supervise financial institutions during normal times. It remains highly important for financial institutions to prepare for a crisis when the financial system is stable. For this reason, the authorities in Japan, in cooperation with Japanese G-SIBs and relevant host authorities, will continue to make steady progress on these initiatives.
- JFSA and OJK have exchanged letters on Fintech Cooperation Framework regarding innovation in the financial sector. This will lead to increased exchanges regarding innovative trends and strengthen the cooperative relationship between the two authorities. The cooperation framework also includes referral mechanisms for financial innovators, which will therefore facilitate their entry into Indonesian or Japanese markets.
- BOJ published the interim report prepared by Liaison and Coordination Committee on Central Bank Digital Currency. BOJ currently has no plan to issue CBDC, the BOJ considers it important to prepare thoroughly to respond to changes in circumstances in an appropriate manner. BOJ expects that this paper will serve as a foundation for further discussion among a wide range of stakeholders on whether to introduce a CBDC and what framework it should take. The report details basic functions and core features of a CBDC, issuance and distribution of CBDC, technical experiments for CBDC conducted by BOJ, investigation and institutional arrangements.
Keywords: Asia Pacific, Japan, Banking, Resolution Framework, Resolvability, TBTF, G-SIBs, Fintech, Regtech, CBDC, Central Bank Digital Currency, Regulatory Capital, Indonesia, OJK, JFSA, BOJ
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Nick Jessop
Scenario modeling expert; risk management specialist; quantitative financial modeler
Previous Article
ACPR Publishes Final Version of RUBA Taxonomy, Issues Other UpdatesRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
