Bank of Japan Governor Kuroda speaking from Tokyo
- possible changes in risk appetite, risk profile of banks amid low-interest rate environment is an issue central banks are highly attentive to
- in short-term, we need to be mindful of possible consequences of banks' engagement in excessive risk-taking as downward pressure on their profits continue
- in long term, securing banks' profitability will depend on whether they can provide new financial services, expand source of profits
- if appropriate risk management steps are not taken by banks, credit costs could rise sharply and stability of financial system could be threatened
- Japan regional banks' core profitability has continued to decrease amid prolonged long rates, declining population
We have heard similar before. Public statements on policy indicate the Bank is not yet looking for a change though.
Kuroda expressing concern on financial stability:
- We should be mindful of cases where the economy faces downward pressure for the financial system
