Fiscal and Monetary Policies in Japan

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Recommendation to improve financial market

– Experiences from Japan

1. The Japanese present financial system – challenges and solutions

1.1. General evaluation of the Japanese current financial system

Although suffering the global financial crisis in 2008, the Japanese financial market is steady. The loan market to company gets better after some bad signal in the period 2008-2009. But, the risks of long term financial instruments, say bond, tend to go up. Specially, the effect of 2008 crisis leads an appreciation of the Yen about 67% against GBP and 75% against South Korea’s won. As a result, Japanese export goods like electronic devices turned to be more expensive, which led to the lower net-export. The car turnovers hit a new low since 1974.

1.2. Challenges

Challenges for the Japanese financial system don’t happen for the first time but have added through the years.

- The Japanese financial institutions need to ensure the stability of basic profit, promote business by active risk management and control.

- The financial institutions need to have countermeasures to cope with market risks which come along with bond holding. One easy-to-see point is that unsecured bond holding can affect profit and bank losses mostly come from bond holding which exceed the profits gained from main business activities in the previous two years.

- The Japanese financial institutions should raise capital through recapitalization and profit accumulation.

- In finally, the financial institutions should prepare sound basics for the management of financial intermediary function. For the long-term economic development of Japan, the financial institutions must re-identify their potential growth rate and provide financial services efficiently.

1...

... middle of paper ...

...esides, free convertible currency can reduce direct intervention of the government in exchange rate management policy and in term of exchange rate management, facilitate it to be more effective.

REFERENCES

1.BOJ (2009) 'Financial System Report'. Tokyo: Financial Systems and Bank Examination

Department, Bank of Japan.

2.BOJ (1996) ‘Main economic indicators of Japan’

3.Le Vinh Danh – Monetary policy and macro adjustment of Central Bank at developed countries

4.Project, N.U.M.R. (2006) 'The Current State and Problems of Finance and Accounting Systems

in Japan, China, and Korea'. Nagasaki: Graduate School of Economics, Nagasaki University,

Frum on the Issues Surrounding the Business in East Asia.

Websites

1.Bank of Japan: http://www.boj.or.jp

2.The State Bank of Vietnam: http://www.sbv.gov.vn

3.General Statistic Office of Vietnam: http://www.gso.gov.vn

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