BOJ warns of potential financial system risks triggered by pandemic
We expect Japan's financial system to remain sound but must be vigilant to developments, the central bank said.
By Reuters |
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TOKYO: The coronavirus pandemic, if prolonged, could trigger a negative feedback loop in which a worsening economy threatens to destabilise Japan's financial system, the Bank of Japan warned on Tuesday.
Japanese financial institutions have increased risky lending, including lending to overseas energy firms, in search of higher yields amid years of ultra-low interest rates, the BOJ said in a semi-annual report analysing Japan's banking system.
Such exposure to various risks is among factors the BOJ must take into account in scrutinising Japan's financial system, the report said.
"We expect Japan's financial system to remain sound but must be vigilant to developments," the central bank said.
Japanese financial institutions have increased risky lending, including lending to overseas energy firms, in search of higher yields amid years of ultra-low interest rates, the BOJ said in a semi-annual report analysing Japan's banking system.
Such exposure to various risks is among factors the BOJ must take into account in scrutinising Japan's financial system, the report said.
"We expect Japan's financial system to remain sound but must be vigilant to developments," the central bank said.
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