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 three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.
The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.
The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.
The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups
The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.
The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.
The Bank for International Settlements (BIS) Innovation Hubs and several central banks are working together on various central bank digital currency (CBDC) pilots.
The European Central Bank (ECB) published the results of its thematic review, which shows that banks are still far from adequately managing climate and environmental risks.
Among its recent publications, the European Banking Authority (EBA) published the final standards and guidelines on interest rate risk arising from non-trading book activities (IRRBB)
The European Commission (EC) recently adopted regulations with respect to the calculation of own funds requirements for market risk, the prudential treatment of global systemically important institutions (G-SIIs)