Japan's financial system is stable and we do not have any concerns about its soundness.
We hope that the regional banks will continue to firmly support local economies affected by COVID-19, especially SMEs (small and medium enterprises), thereby facilitating economic recovery.
In the second supplementary budget for FY2020, the government has secured a budget for strengthening regional banks’ financial intermediary function of supporting cash flow and promoting the equity financing of companies.
Furthermore, as a preemptive action to deal with the impact of COVID-19, the Financial Services Agency is deliberating on strengthening regional banks’ financial intermediary function through government capital injection, in the following ways:
- committing adequate financial capabilities for government capital injection, and
- submitting a Bill to the Diet which
1. extends the deadline for regional banks to request government capital injection by 4 years
from March 31, 2022 to March 31, 2026, and
2. encourages regional banks affected by the impact of COVID-19 to request government capital
injection by easing collateral conditions (e.g. those regional banks are exempted from the obligation
of setting specific management goals with respect to improvement in profitability and efficiency).
