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Japan: Special Funds-Supplying Operations, Sharon M. Nunn
Japan: Special Funds-Supplying Operations, Sharon M. Nunn
Journal of Financial Crises
The Bank of Japan responded to the COVID-19 economic downturn in March 2020 with several financial stability interventions. The Special Funds-Supplying Operations to Facilitate Financing in Response to the Novel Coronavirus (COVID-19) (SFSO) offered interest-free loans of up to one year in maturity to eligible financial institutions in an attempt to encourage broader lending to Japanese businesses and households. Counterparties could pledge as collateral a broad range of corporate and private debt, including corporate bonds and asset-backed securities. Enhancements made throughout the program's operation led to substantial increases in SFSO use. First, the BoJ expanded institution and collateral eligibility, as …
Japan’S Act On Strengthening Financial Functions (Asff), Vaasavi Unnava, Junko Oguri
Japan’S Act On Strengthening Financial Functions (Asff), Vaasavi Unnava, Junko Oguri
Journal of Financial Crises
After the Japanese Financial Crisis in 1990s, the non-performing loan problem was mitigated in the large Japanese banks but persisted in the regional banking system. By 2004, regional banks accounted for half of all non-performing loans. In 2004, the government passed the Act on Strengthening Financial Functions (ASFF), legislation for capital injections to address the non-performing loan problem. Aimed at regional banks, the ASFF secured ¥2 trillion in capital, with various eligibility restrictions and requirements, such as a rigorous debt restructuring plan. As the Japanese economy and the financial system encountered multiple external shocks, the government amended the Act several …
Financial Functions Stabilization Act, Vaasavi Unnava
Financial Functions Stabilization Act, Vaasavi Unnava
Journal of Financial Crises
In 1990, the asset-pricing bubble in Japan peaked and began a steady decline. Over the next seven years, a series of bank failures induced the Japanese government to introduce the first of a series of capital injections in 1998, 1999, and 2004. The capital injection of 1998, authorized by the Financial Functions Stabilization Act, made ¥13 trillion ($103 billion) available to financial institutions that applied. By the end of the injection window, 21 banks and trusts applied for and received ¥1.8 trillion ($13.5 billion) in subordinated debt and loans and preferred shares. While there were no limits on compensation for …
Prompt Recapitalization Act, Vaasavi Unnava
Prompt Recapitalization Act, Vaasavi Unnava
Journal of Financial Crises
In 1997, Japan’s banks were in crisis due to hundreds of billions of dollars of non-performing real estate loans. In response, the government performed three rounds of capital injections in 1998, 1999, and the early 2000s. The capital injection of 1999, authorized by the Prompt Recapitalization Act, made as much as ¥25 trillion ($208 billion) available to financial institutions that applied, regardless of their capitalization. By the end of the injection window, 32 banks and trusts applied for and received ¥8.6 trillion ($71.6 billion) total in preferred shares and subordinated debts. The Act required banks to submit and adhere to …
The Resolution And Collection Corporation Of Japan, Mallory Dreyer
The Resolution And Collection Corporation Of Japan, Mallory Dreyer
Journal of Financial Crises
Though the Japanese real estate and stock market bubble burst in the early 1990s, the ensuing financial crisis in Japan did not reach a systemic level until 1997, when four large financial institutions failed in a single month. Because of their heavy exposure to real estate and equity markets, Japanese banks had a nonperforming loan (NPL) problem, which was prolonged, and private sector estimates of the scale of the NPL problem differed significantly from the official estimates. In response, the Japanese government created multiple asset management companies; the Resolution and Collection Corporation (RCC) was the result of the merger of …
Japan's Special Funds-Supplying Operations (Japan Gfc), Alec Buchholtz
Japan's Special Funds-Supplying Operations (Japan Gfc), Alec Buchholtz
Journal of Financial Crises
Following the collapse of Lehman Brothers in September 2008, the global commercial paper (CP) market began to tighten as interest rates rose and investors sought more-liquid money market securities. The Bank of Japan (BOJ) introduced several measures in late 2008 to make liquidity available to nonfinancial corporations that were strapped for cash. In December 2008, the BOJ implemented special funds-supplying operations in order to provide unlimited liquidity to banks and other financial institutions so they could continue to fund nonfinancial corporations. The BOJ would provide one- to three-month loans against an equal value of eligible corporate debt at a rate …
Japan's Outright Purchases Of Commercial Paper (Japan Gfc), Alec Buchholtz
Japan's Outright Purchases Of Commercial Paper (Japan Gfc), Alec Buchholtz
Journal of Financial Crises
Following the collapse of Lehman Brothers in September 2008, the global commercial paper (CP) market began to tighten as interest rates rose and investors sought more-liquid money market securities. The Bank of Japan (BOJ) introduced several operations in late 2008 to promote liquidity in the CP market. In January 2009, the BOJ began to purchase CP and asset-backed CP outright from banks and other financial institutions. The BOJ could purchase up to ¥3 trillion of CP with a residual maturity of up to three months, among other short-term securities, via 10 purchases of up to ¥300 billion each. The BOJ …
Restructuring And Forgiveness In Financial Crises D: The Japanese Financial Crisis Of The 1990s, Christian M. Mcnamara, Andrew Metrick
Restructuring And Forgiveness In Financial Crises D: The Japanese Financial Crisis Of The 1990s, Christian M. Mcnamara, Andrew Metrick
Journal of Financial Crises
In November 1997 the Japanese government confronted a problem of enormous proportions when the turmoil that had been roiling the financial markets since the collapse of a real estate and stock market asset bubble in 1990 reached a crescendo with the failure of four major financial institutions in quick succession in the space of a month. Prior to these failures, the damage done by the collapsing bubble had seemed to be limited to certain segments of the financial landscape, and the government’s response consisted largely of targeted intervention when necessary for clearly insolvent financial institutions, with a more comprehensive approach …