Financial Overheating Risks Reach Postbubble Highs: BOJ

Economy Politics

Tokyo, Oct. 22 (Jiji Press)--Overheating risks related to such financial activities as corporate and real estate loans in Japan have reached the highest levels since the collapse of the country's bubble economy in the early 1990s, on the back of continuously low domestic interest rates, the Bank of Japan said in a report on Monday.

Although there are currently no signs of overheating as observed during the bubble period in the late 1980s, the BOJ will closely monitor whether financial institutions, companies and households are becoming overly optimistic amid the BOJ's continued monetary easing, an official of the central bank's Financial System and Bank Examination Department said.

In its Financial System Report, the BOJ said that financial institutions' lending attitudes and real estate loans, as well as stock prices, are getting close to overheating.

With banks' lending attitudes being accommodative on the back of massive monetary easing, loans to companies with relatively low creditworthiness have increased, the report said.

The balance of real estate loans has reached a record high, topping the peak level in the 1980s and 1990s, it added.

[Copyright The Jiji Press, Ltd.]

Jiji Press