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
BOE Sets Out Its Thinking on Regulatory Capital and Climate Risks
The Bank of England (BOE) published a working paper that aims to understand the climate-related disclosures of UK financial institutions.
OSFI Finalizes on Climate Risk Guideline, Issues Other Updates
The Office of the Superintendent of Financial Institutions (OSFI) is seeking comments, until May 31, 2023, on the draft guideline on culture and behavior risk, with final guideline expected by the end of 2023.
BIS Paper Examines Impact of Greenhouse Gas Emissions on Lending
BIS issued a paper that investigates the effect of the greenhouse gas, or GHG, emissions of firms on bank loans using bank–firm matched data of Japanese listed firms from 2006 to 2018.
HMT Mulls Alignment of Ring-Fencing and Resolution Regimes for Banks
The HM Treasury (HMT) is seeking evidence, until May 07, 2023, on practicalities of aligning the ring-fencing and the banking resolution regimes for banks.
BCBS Report Examines Impact of Basel III Framework for Banks
The Basel Committee on Banking Supervision (BCBS) published results of the Basel III monitoring exercise based on the June 30, 2022 data.
PRA Consults on Prudential Rules for "Simpler-Regime" Firms
Among the recent regulatory updates from UK authorities, a key development is the first-phase consultation, from the Prudential Regulation Authority (PRA), on simplifications to the prudential framework that would apply to the simpler-regime firms.
DNB Publishes Multiple Reporting Updates for Banks
DNB, the central bank of Netherlands, updated the list of additional reporting requests and published additional data quality checks and XBRL-Formula linkbase documents for the first quarter of 2023.
NBB Sets Out Climate Risk Expectations, Issues Reporting Updates
The National Bank of Belgium (NBB) published a communication on climate-related and environmental risks, issued an update on XBRL reporting
EBA Updates Address Securitization Standards and DGS Guidelines
The European Banking Authority (EBA) published the final draft of the regulatory technical standards that set out conditions for assessment of homogeneity of the underlying exposures in simple, transparent, and standardized (STS) securitizations.
FSB Publishes Letter to G20, Sets Out Work Priorities for 2023
The Financial Stability Board (FSB) published a letter intended for the G20 Finance Ministers and Central Bank Governors, highlighting the work that FSB will take forward under the Indian G20 Presidency in 2023
