Japan's Financial Services Agency is closely watching whether banks are properly managing the risks from rising interest rates across bond holdings, corporate lending, and ultra-long mortgage loans. According to Sina Finance, Financial Services Agency Commissioner Yutaka Ito said the agency has a full grasp of financial institutions' asset conditions and is reviewing their risk management, adding that if shortcomings are found, it will urge corrective action.
Ito said the agency is focused on ensuring banks and other financial institutions can adapt smoothly as interest rates gradually return to normal after years of deflation in Japan. He also said bond-related book losses across the industry remain at a "manageable level," and that regulators will not tell banks and other financial institutions exactly how to handle those losses.