JFSA and BOJ announced additional measures in response to the COVID-19 pandemic. JFSA notified that the central government decided the second supplementary budget for financial year 2020 to strengthen cash flow support for companies, including expansion of the coverage of no-interest unsecured loans by private financial institutions. JFSA has issued requests to financial institutions to continue to offer loans to companies and has outlined possible relaxation of credit terms. The requests are related to support measures such as deferment of payments, alteration of loan conditions, provision of new loans, and implementation of the new loan program in collaboration with local governments and Credit Guarantee Corporations. In addition, JFSA issued a notice, along with questions and answers (Q&A), regarding the disclosure of corporate information concerning the impact of the COVID-19. This includes disclosure of additional information that enables users of financial statements to understand the assumptions that were made to derive the accounting estimates.
At the Monetary Policy Meeting held in May 2020, the Policy Board of BOJ made the following decisions to further support financing mainly of firms, with a view to address the impact of COVID-19:
- BOJ shall amend the principal terms and conditions of the "special funds-supplying operations to facilitate financing" in response to COVID-19.
- BOJ shall amend the "special rules for member financial institutions of central organizations of financial cooperatives to use the special funds-supplying operations to facilitate financing."
- BOJ shall amend the "principal terms and conditions for outright purchases of corporate bonds."
BOJ also introduced a new fund-provisioning measure to further support financing, mainly of small and medium-size firms. This measure includes fund-provisioning against eligible loans such as interest-free and unsecured loans made by eligible counterparties based on the emergency economic measures of the government. In addition, BOJ decided to strengthen the special funds-supplying operations to facilitate financing in response to the COVID-19 crisis. The decision includes expanding the range of collateral in calculating the maximum amount of loans, increasing the number of eligible counterparties, and applying a positive interest rate to current account balances.
Keywords: Asia Pacific, Japan, Banking, Securities, COVID-19, Credit Risk, Loan Guarantee, Disclosure, Corporate Bonds, Q&A, JFSA, BOJ
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Previous ArticleEC on Readiness at the End of Transition Period between EU and UK
The European Banking Authority (EBA) published four draft principles to support supervisory efforts in assessing the representativeness of COVID-19-impacted data for banks using the internal ratings based (IRB) credit risk models.
The European Council and the European Parliament (EP) reached a provisional political agreement on the Corporate Sustainability Reporting Directive (CSRD).
The Prudential Regulation Authority (PRA) launched a consultation (CP6/22) that sets out proposal for a new Supervisory Statement on expectations for management of model risk by banks.
The European Commission (EC) published the Delegated Regulation 2022/954, which amends regulatory technical standards on specification of the calculation of specific and general credit risk adjustments.
The Hong Kong Monetary Authority (HKMA) announced that the Green and Sustainable Finance (GSF) Cross-Agency Steering Group has launched the information and data repositories and outlined the progress made in advancing the development of green and sustainable finance in Hong Kong.
The Bank for International Settlements (BIS) Innovation Hub updated its work program, announcing a set of projects across various centers.
The European Insurance and Occupational Pensions Authority (EIOPA) published two consultation papers—one on the supervisory statement on exclusions related to systemic events and the other on the supervisory statement on the management of non-affirmative cyber exposures.
The Network for Greening the Financial System (NGFS) published a report that explores the feasibility of integrating the G-Cubed general equilibrium model into the NGFS suite of models.
Certain members of the U.S. Senate Committee on Banking, Housing, and Urban Affairs issued a letter to the Securities and Exchange Commission (SEC)
The European Insurance and Occupational Pensions Authority (EIOPA) published a consultation paper on the advice on the review of the securitization prudential framework in Solvency II.