ファイナンス 2017年9月号 Vol.53 No.6

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enterprises （SMEs） are welcome, but many banks still need to develop commensurate credit assessment capacities. Stress tests suggest that the banking sector remains broadly sound, although market risks are increasing and there are some vulnerabilities among regional banks. Insurers have turned to foreign investments to provide the yield needed to meet the interest guarantees, but economic-value based solvency positions of life insurers have declined substantially. Compared to ample liquidity in yen and on an all-currency bases, potential vulnerabilities exist in foreign currency positions, particularly for some internationally active regional banks.An aging and shrinking population is likely to imply gradual structural changes in the Japanese financial system. Empirical analysis suggests that aging will likely reduce the role of banks in financial intermediation. With low demand, domestic banking is more likely to evolve toward transactional and fee-based services. The impact of demographic headwinds is particularly strong for regional and Shinkin banks. Actions underway by these institutions to address these challenges are not without risks and may not be sucient on their own.While financial oversight has undergone significant improvements, further progress is needed to respond to these emerging issues. Further developing internal processes is key to supporting full risk-based prudential supervision to keep pace with the more sophisticated activities emerging across banks, insurers, and securities firms. Corporate governance needs to be strengthened across the whole banking and insurance sectors. Capital requirements need to be more tailored to individual bank risk profiles, and a stronger principles-based approach to related party exposures is required to prevent risks from building up as banks form alliances with other banks and other types of nancial services rms. Further steps should be taken to implement an economic-value-based solvency regulation for the insurance sector, since certainty about the future regime would help companies adjust their business and investment strategies. The macroprudential framework could be further strengthened by clarifying the mandate of the Council for Cooperation on Financial Stability （CCFS） and proactively expanding the macroprudential toolkit.It is therefore important to continue engaging with financial institutions on the implications of macroeconomic and demographic trends, and take actions on a timely basis when viability concerns are identified. The authorities are encouraged to further engage with bank boards and senior management to ensure that banks fully understand the implications of underlying trends for the future viability of their institutions and act promptly to facilitate the exit of firms when they are no longer viable. Regional banks should be encouraged to consider increasing fee-based income. Consolidation among regional banks may bring valuable economies of scale and scope and smoothen the transition to smaller financial systems at the regional level, although consolidation alone is unlikely to be sufficient to address the challenges. The supply of financial services by the industry should continue to adapt to the demands of an aging population.These long-term challenges for business models of many banks, combined with the existence of large systemic institutions, highlight the need for a strong crisis management and resolution framework. Despite important advances in the design of the framework and in recovery and resolution planning, there remains room for improvement. The complexity of the framework, and ambiguities regarding the circumstances under which different components of the framework would be used, could prove challenging for implementation and may thereby contribute to expectations of public support. Further steps to ensure that supervisory powers are deployed without delay should be embedded more rmly in the authorities’ framework for early intervention. Expansion of the resolution toolkit, enhancements and clarifications in the legal framework―including its extension to central counterparties（CCPs）―and improvements in operational aspects would help authorities’ readiness and steer market expectations and incentives.（2）FSAP Key RecommendationsRecommendations and Authority Responsible for Implementation★Cross-Cutting Issues①Further raise corporate governance standards to bolster independence of board and oversight functions from senior management across banking and insurance sectors （JFSA）.②Further develop internal processes to support full risk-based supervision for banks, insurers, and securities rms （JFSA, SESC）.③Consider enhancing independence of JFSA and BoJ in key supervisory issues （PM, MoF, JFSA, BoJ）.★Systemic Risks①Develop own supervisory stress testing model for both solvency and liquidity risk analysis for banks, and for solvency risk analysis for 62ファイナンス　2017.9ＳＰＯＴ