Japan FSA 2023 Financial Administration Policy

Last week, the Financial Services Agency (FSA) published its “Financial Administration Policy,” which is a set of priority issues in financial administration and policies for addressing financial administration for the 2023 administrative year. With an English version of the document currently not available, the following provides a translation of the overview and main points.

Overview

Support the stability of the economy and people's lives, leading to subsequent growth

• Encourage financial institutions to thoroughly support management improvement and business revitalization according to the actual situation of business operators, such as the use of subordinated capital loans and REVIC. Confirm the status of efforts by financial institutions through intensive hearings regarding support for business operators, and engage in ongoing dialogue on identified issues.
• In order to improve business support capabilities, the government will develop knowledge and know-how related to business revitalization support to regional financial institutions, and promote matching of management personnel.
• In order to form lending practices that encourage sustainable growth of businesses, we will promote the “Management Guarantee Reform Program “ and work towards the early institutionalization of security interests for entire businesses.

Build a financial system that balances social issue resolution and economic growth

• Toward the realization of an asset management nation, the government will advance the sophistication of the asset management industry and strengthen the functions of asset owners, and actively disseminate information domestically and internationally through holding “Japan Weeks,” etc. We will promote a plan to double our asset income, including publicizing and publicizing the new NISA system, accumulating examples of its use, and enhancing financial and economic education through the establishment of the Organization for the Promotion of Financial and Economic Education.
• In order to facilitate startup funding, consider improving the environment for stock investment crowdfunding and relaxing the approval requirements for private trading systems (PTS).
• In order to materialize corporate governance reforms and enhance disclosure of corporate information, we will promote the review of the large shareholding reporting system, the enhancement of disclosure of non-financial information, and the review of quarterly disclosure.
• In order to promote sustainable finance, efforts will be made to enhance corporate sustainability disclosure, promote dialogue between industry and finance toward GX, and promote impact investment.
• Toward the realization of a digital society, work to promote the entry of fintech businesses and improve the environment regarding digital money, crypto assets, etc.

Ensuring the stability and reliability of the financial system

• Pay close attention to trends in global financial and economic conditions, etc. , and analyze their impact on the stability of the financial system.
• In order to build a sustainable business model for financial institutions , the government will monitor governance, various risk management systems, internal audits, etc., and promote the strengthening of management foundations.
• Request financial institutions to comply with laws and regulations from the perspective of user protection.
• To ensure customer-oriented business operations, the government will promote the development of a system for structuring, selling, and managing financial products that contribute to the best interests of customers, including the handling of high-risk finance
• Encourage measures to deal with money laundering measures, cyber security, economic security, and system risk management based on the world situation.

Constantly evolve and deepen financial administration

• In order to improve the sophistication of financial administration, we will work to improve the sophistication of data utilization, promote further coordination and collaboration with the Finance Bureau, and strengthen our ability to disseminate policy both domestically and internationally.
• In order to improve the organizational strength of financial administration, we will strive to improve the abilities and qualifications of employees, and work to create a workplace environment that emphasizes employee initiative and autonomy and an environment where employees can work actively.

Main Points

Further promotion of business support

• Encourage financial institutions to not only provide financing support, but also provide management improvement support and business revitalization support by utilizing subordinated equity loans, REVIC, etc.
• Through focused interviews regarding business support, we will understand issues, etc. and encourage thorough support that is tailored to the actual circumstances of business operators.

Realization of an asset management nation and promotion of a plan to double asset income

• By the end of the year, we will formulate a concrete policy plan for becoming an asset management nation, such as upgrading the asset management industry and strengthening the functions of asset owners. Actively disseminate information domestically and internationally through events such as “Japan Weeks”.
• Promote a plan to double asset income by promoting the spread and utilization of the new NISA system (starting in January 2024) and enhancing financial and economic education. Engage in startup support, corporate governance reform, promotion of sustainable finance, and realization of a digital society.

Ensuring stability and trust in the financial system

• Pay close attention to the impact of domestic and international financial and economic developments on the stability of the financial system.
• Encourage financial institutions to strengthen their management foundations in order to build sustainable business models.
• Maintaining the soundness of financial institutions, ensuring thorough compliance with laws and regulations, ensuring customer-oriented business operations, anti-money laundering measures, and cyber security.

Building financial-related legislation that supports sustainable economic growth

• Aim to promptly submit related bills to the Diet in order to institutionalize security interests over entire businesses and review the large-volume ownership reporting system.
• Assuming the enactment of related bills that were subject to continued review in the previous ordinary Diet session, the establishment of the Organization for the Promotion of Financial and Economic Education (spring 2024) and full-scale operation (summer of the same year), review of quarterly disclosure (April of the same year), etc.

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