Regulators are surveying Japan's financial firms to determine their exposure to foreign assets, including risky credit products, as the global economy slows, according to sources.
The Bank of Japan and Financial Services Agency want to get a more detailed picture of domestic banks' and insurers' investments in collateralized loan obligations (CLOs) and leveraged loans to assess how they will fare if the borrowers run into difficulties, the sources said.
The U.S.-China trade war and ensuing slowdown are adding to pressure on Japanese policymakers to examine where risks lurk in the financial system and consider how to respond if stresses emerge. The joint research also underscores how officials are trying to assess the effects of Japan's more than six years of unprecedented monetary stimulus.