Japan’s financial firms to try stress test to check crisis readiness


Japan’s financial firms to try stress test to check crisis readiness

The major financial institutions in Japan are set to undergo a stress test that will determine their preparation and readiness for any major shakeout in the financial markets as fears and concerns about a global recession mount.

The Bank of Japan, as well as the Financial Services Agency (FSA), will facilitate and oversee the stress test to assess the results to find out how capital and liquidity on-hand would be impacted at Japanese financial firms if stocks tumbled and its currency, yen, increased.

Details as to when the stress test will be conducted have yet to be announced. The BOJ and FSA will be teaming up for the first time to conduct the special assessment.

Being eyed to take the test are seven major Japanese institutions including three big banks assigned as G-SIBs, or global systematically important banks plus four other systematically important banks (D-SIBs).

These banks may be required to boost their capital. The significant results that the test will yield will make these banks subject to improving shortcomings.

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