Featured Product

    JFSA Summarizes Stress Testing Exercise, Responds to IFRS Consultation

    December 17, 2020

    JFSA published a paper that discusses the supervisory simultaneous stress testing exercise based on common scenarios, which BOJ and JFSA first conducted in 2020. The paper discusses differences from the institutional arrangements in Europe and the United States, describes the characteristics of the simultaneous stress testing conducted by BOJ and JFSA, and presents timeline and conclusions of the work conducted. In a separate statement, JFSA published the response of the IFRS Council of Japan to the IFRS consultation on sustainability reporting; the Council welcomes and supports the proposal to establish a new standard-setting board for sustainability reporting.

    In response to the consultation on sustainability reporting, the IFRS Council of Japan notes that it supports the establishment of a new standard-setting board for sustainability reporting, under the presumption that the IFRS Foundation will maintain its role and responsibility of improving capital market transparency and efficiency through high-quality standard-setting. The Council also suggested improvements to certain proposals. The Council believes that the primary audience for sustainability reporting should be capital market participants (with investors at the center) and other users of financial information.  The Council noted that it is important for the Sustainability Standards Board (SSB) members to have diverse backgrounds, including the regions they come from and the industries to which they belong. Furthermore, , other ESG factors, especially S (Social) and G (Governance), should also be addressed in parallel to climate change, suggested the Council. Believing that Japan is the largest contributor in the world, the Council pointed out that 320 companies and institutions from Japan support the Task force on Climate-related Financial Disclosures (TCFD) as of November 16, 2020. .  

    The paper on stress testing exercise highlights that the simultaneous stress testing exercise commenced in 2019. The common scenarios were formulated in October 2019 and these scenarios were presented to five major banks in early December 2019; these banks are Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group, Mizuho Financial Group, Sumitomo Mitsui Trust Holdings, and Norinchukin Bank. These participating banks submitted the stress test results by the end of March 2020. Concurrently, BOJ and JFSA also conducted stress tests of each of these participating banks using the same scenarios. From April 2020, BOJ and JFSA jointly compared and examined the submitted stress test results while closely communicating with the participating banks. Subsequently, feedback was provided to the participating banks through mid-July 2020. BOJ and JFSA have already started working on preparations for the next round of simultaneous stress testing, such as the design of the common scenarios. In entering the process for the next round, BOJ and JFSA expect participating banks to report on how their management perceives the issues presented in the feedback and what actions they plan to take. Going forward, BOJ and JFSA will continue to closely work together and further improve the effectiveness of simultaneous stress testing.

     

    Keywords: Asia Pacific, Japan, Banking, Insurance, Securities, Stress Testing, Climate Change Risk, ESG, Reporting, Responses to Consultation, BOJ, JFSA

    Featured Experts
    Related Articles
    News

    BIS Bulletin Examines Cognitive Limits of Large Language Models

    The use cases of generative AI in the banking sector are evolving fast, with many institutions adopting the technology to enhance customer service and operational efficiency.

    January 25, 2024 WebPage Regulatory News
    News

    ECB is Conducting First Cyber Risk Stress Test for Banks

    As part of the increasing regulatory focus on operational resilience, cyber risk stress testing is also becoming a crucial aspect of ensuring bank resilience in the face of cyber threats.

    January 24, 2024 WebPage Regulatory News
    News

    EBA Continues Momentum Toward Strengthening Prudential Rules for Banks

    A few years down the road from the last global financial crisis, regulators are still issuing rules and monitoring banks to ensure that they comply with the regulations.

    January 24, 2024 WebPage Regulatory News
    News

    EU and UK Agencies Issue Updates on Final Basel III Rules

    The European Commission (EC) recently issued an update informing that the European Council and the Parliament have endorsed the Banking Package implementing the final elements of Basel III standards

    December 19, 2023 WebPage Regulatory News
    News

    Industry Agency Expects Considerable Uptake for Swiss Climate Scores

    The Swiss Federal Council recently decided to further develop the Swiss Climate Scores, which it had first launched in June 2022.

    December 18, 2023 WebPage Regulatory News
    News

    BCBS Consults on Disclosure of Climate Risks, Issues Other Updates

    The Basel Committee on Banking Supervision (BCBS) launched consultation on a Pillar 3 disclosure framework for climate-related financial risks, with the comment period ending on February 29, 2024.

    December 18, 2023 WebPage Regulatory News
    News

    US Government Moves to Regulate Development and Use of AI Models

    The U.S. President Joe Biden signed an Executive Order, dated October 30, 2023, to ensure safe, secure, and trustworthy development and use of artificial intelligence (AI).

    December 18, 2023 WebPage Regulatory News
    News

    MAS Launches Gprnt Digital Platform for ESG Reporting for SMEs

    The Monetary Authority of Singapore (MAS) launched an integrated digital platform, Gprnt, also known as “Greenprint.”

    November 29, 2023 WebPage Regulatory News
    News

    EBA Finalizes Templates for One-Off Climate Risk Scenario Analysis

    The European Banking Authority (EBA) has published the final templates, and the associated guidance, for collecting climate-related data for the one-off Fit-for-55 climate risk scenario analysis.

    November 28, 2023 WebPage Regulatory News
    News

    NGFS Publishes Phase IV Long-term Climate Scenarios for Banks

    The Network for Greening the Financial System (NGFS) published its latest set of long-term climate macro-financial scenarios (Phase IV) for assessing forward-looking climate risks.

    November 28, 2023 WebPage Regulatory News
    RESULTS 1 - 10 OF 8947