Country Reports

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2024

May 13, 2024

Japan: Financial Sector Assessment Program-Technical Note on Regulation and Supervision of Fintech

Description: This technical note reviews the functioning and effectiveness of the regulation, supervision, and systemic risk monitoring of fintech in Japan. It focuses on the institutional arrangements for fintech monitoring, as well as the approach that the Japanese authorities have taken to review the regulatory perimeter around fintech-related issues, noting regulatory amendments on digital payments, banking, and crypto assets most notably. On crypto assets, the note reviews the regulatory framework in Japan, and the approach of the Financial Services Agency (FSA) to licensing and supervision of crypto exchanges. The note sets out a series of recommendations to further strengthen the domestic regulatory, supervisory, and risk monitoring frameworks.

May 13, 2024

Japan: Financial Sector Assessment Program-Technical Note on Financial Supervision and Regulation of Climate Related Issues

Description: The government of Japan has pledged to substantially reduce greenhouse gas (GHG) emissions in the coming decade. Japan is among the largest greenhouse gas emitting economies in the world exposing it to significant transition risk. Although Japan’s overall exposure to physical risk is considered as very high due to the changing climate and the impact of the predicted increase in the frequency and severity of natural catastrophes, its overall vulnerability to physical risks is relatively low because of its strong capacity to cope with such risks. In accordance with the United Nations Climate Change Convention, Japan has set an interim target to reduce GHG emissions by 46 percent from 2013 levels until 2030, with an objective of achieving net-zero GHG emissions by 2050. To realize this ambitious goal, Japan enacted the Green Transformation (GX) Promotion Act in May 2023 and laid out, based on the law, a comprehensive strategy to facilitate the transition to a net zero GHG economy.

May 13, 2024

Japan: Selected Issues

Description: Selected Issues

May 13, 2024

Maldives: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Maldives

Description: Despite headwinds from the war in Ukraine, the Maldives’ economic recovery from the COVID-19 pandemic has shown resilience. The cyclical rebound and still favorable economic outlook provide an opportunity for the Maldives to address its large fiscal and external vulnerabilities. This calls for immediate policy actions to rebuild economic resilience and reduce debt to a sustainable level. Given that the Maldives is highly vulnerable to climate change, early actions to rein in debt vulnerabilities will help support the Maldives’ efforts to scale up the much-needed climate adaptation investments in a resource constrained context.

May 13, 2024

Japan: Financial Sector Assessment Program-Technical Note on Financial Safety Net and Crisis Readiness

Description: Japan has made progress in improving its crisis readiness since the 2017 FSAP, and the authorities are committed to make further enhancements that are needed. Notably, the authorities have introduced loss absorbing capacity (LAC) requirements, expanded the recovery and resolution planning (RRP) perimeter to some degree, set up the Recovery and Resolution Planning Office (RRP Office), and revised the RRP guidelines for banks and financial market infrastructures (FMIs). They have also continued with annual reviews and updates of existing RRPs, advanced the work in firm-specific crisis management groups (CMGs), contributed to the workings of international standard-setting bodies, and engaged in bilateral workshops with foreign counterparts. These improvements were built on a relatively comprehensive bank resolution regime, but hands-on experience with managing bank failures and financial crises is fading in Japan, while the financial system is evolving and getting more complex, putting a premium on accelerated and expanded crisis readiness efforts.

May 13, 2024

Austria: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Austria

Description: Strong policy responses have helped to mitigate the impact of the recent shocks. Output recovered rapidly from the pandemic and, in response to the energy price shock, the authorities made use of available fiscal room to mitigate its impact while preserving price signals to encourage lower gas consumption and taking steps to secure access to additional gas supplies. Despite these efforts, the economy slipped into recession over the last few quarters, with high energy prices, elevated inflation, and higher interest rates weighing on output and demand. Inflation still persists above the euro-area average even as it has steadily declined since January 2023, in particular as services inflation has proved to be sticky amid high wage growth. Over the medium term, demographic headwinds pose significant fiscal and growth challenges.

May 13, 2024

Japan: Financial Sector Assessment Program-Technical Note on Cyber Resilience and Financial Stability

Description: Japan’s financial system is digitalizing rapidly, increasing exposure to cyber risk. As in other jurisdictions, the pace of digitalization in Japan has increased substantially, but cyber incidents have also surged in recent years. The tight interdependencies within its financial system, and beyond, make Japan vulnerable to evolving cyber threats. The Financial Services Agency (FSA) and Bank of Japan (BOJ) have made progress in enhancing the cyber resilience of the financial sector, but further work and enhancements are needed.

May 13, 2024

Austria: Selected Issues

Description: Selected Issues

May 13, 2024

Japan: Financial Sector Assessment Program-Technical Note on Regulation and Supervision of Investment Funds

Description: This technical note reviews the functioning and effectiveness of the regulation, supervision, and systemic risk monitoring of investment funds in Japan. It focuses on the requirements that are directly relevant to maintaining financial stability, namely, valuation, segregation and safekeeping of fund assets, liquidity risk management and redemption of fund units. The note also reviews the efficacy with which the authorities: i) analyze and monitor the systemic risk arising from fund management activities in Japan; ii) apply the domestic regulatory framework pertinent to investment funds; and iii) supervise compliance with the regulatory framework. The note sets out a series of recommendations to further strengthen the domestic regulatory, supervisory, and risk monitoring frameworks.

May 13, 2024

Japan: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Japan

Description: The Japanese economy continues to grow after the pandemic, with broad-based price increases following three decades of low inflation. The “new form of capitalism” agenda and children-related policies are key priorities for the Kishida administration, but the fiscal burden has increased.

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