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Since the beginning of the 1990s, the Japanese banking
sector has been facing serious problems, characterized by
one percent average annual growth since 1992, instability
in the stock markets, an overvalued currency that has made
exports too expensive, and a perennially troubled banking
system. The country’s banks are yet to clear their
balance sheets of bad loans derived from a financial crisis
that struck a decade ago. No solution has been found so
far to the problems; consequently the crisis has gradually
spread to other sectors of the country's economy.
Over the last few years, banks have been rolling over bad
loans instead of writing them off and these loans now amount
to at least 82 trillion yen - 16% of a year’s gross
domestic product, according to the Bank of Japan. The amount
even overshadows the total amount of capital held by the
banking system, which is 60 trillion yen.
The Japanese Central Bank has taken actions in the face
of the numerous bankruptcies of major financial institutions
by changing legislation and enacting new institutional regulations,
which have brought the economy to a point of no return,
requiring immediate write-offs on non-performing loans.
International experts have say that the country’s
Financial Services Agency should close or merge half the
Banks in Japan.
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Japan