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Global financial crisis - Japan’s experience and policy response

  • Economics


Global Financial Crisis: Japan's Experience and Policy Response 1/11 “Global financial crisis – Japan’s experience and policy response” Remarks by Dr. Takafumi Sato Former Commissioner, Financial Services Agency Asia Economic Policy Conference organized by the Federal Reserve Bank of San Francisco Santa Barbara, CA, United States October 20, 2009 Introduction Thank you. It is my pleasure to join this discussion. I happen to have served Japan’s financial regulatory authority for more than ten years until I stepped down as head of the authority last July. This means that I experienced both the current global financial crisis and Japan’s last banking crisis in the late 1990s. I had the privilege of dealing with a big financial crisis, not only once but twice. “What a lucky person I am!” I sometimes feel like this somewhat cynically. Anyway, the scale of the current crisis has often been characterized as “once-in-a-century” or “the most severe since the Great Depression.” Because I had such harsh experience, however, my feeling is that the current stress is rather a “second-in-a-decade" event. 2/11 Using this perspective, I would like to explain today the effects of the current global crisis on Japan’s financial sector and the authorities’ policy response. I will first describe the differences between the last crisis and the current turbulence in Japan in terms of their nature and magnitude. Secondly, I will touch upon the possible reasons why Japan’s financial system has been less affected than the United States and Europe this time. Then I will move on to describe the measures taken in Japan in response to the current financial stress, which somewhat differs from that in the United States and Europe. Finally, I would like to raise a point with regard to the manner in which the world’s regulators should advance their reform agenda. 1. Comparing the curr

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