Working paper

The effort to stabilise the financial system in Japan: an outline and the characteristics of the programme for financial revival

This paper provides an overview of the Programme for Financial Revival announced in October 2002 in Japan. The programme aimed to dramatically reduce

Publishing date
18 March 2015

This Working Paper provides an overview of the Programme for Financial Revival announced in October 2002 in Japan. The programme aimed to dramatically reduce the large amount of non-performing loans that remained until the end of the 1990s. In addition to solving the problem of bad loans, the Programme for Financial Revival aimed to build a strong financial system. For this purpose, the programme comprised three pillars:

1) creation of a new framework for the financial system,

2) creation of a new framework for corporate revitalisation,

3) creation of a new framework for financial administration.

The Japanese experience suggests that despite its delayed introduction, this programme may be considered successful in going some way to drastically reduce non-performing loans and stabilise the financial system. Japan’s financial problems and their resolution since the 1990s provide a number of lessons for other economies, particularly for Europe in relation to the difficulties over the euro.

About the authors

  • Yoichi Matsubayashi

    Yoichi Matsubayashi is a Japanese citizen and a visiting fellow at Bruegel from 26 August to 31 October 2013.

    His research interests are international macroeconomics and monetary economics including banking behavior and policy response. His research topic at Bruegel is financial system comparison between EU and Japan. Especially his concern is Japan’s experience of financial problem since 1990s and its applicability to the EU.

    Yoichi holds Ph.D in Economics from Kobe University and has worked as a professor of graduate school of Economics at Kobe University. He also works as an academic lecturer at research and statistics department in Bank of Japan (BOJ) and as a senior research fellow at policy research institute in Ministry of Finance (MOF).His international engagement was a visiting fellow at Harvard University (2010-2011).

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