MNI BRIEF:Japan Monitors SVB Fallout Amid Focus On Small Banks

Japanese authorities are carefully monitoring the actions of U.S. regulators and movements in financial markets, but they view the collapse of Silicon Valley Bank as caused by unique circumstances relating to the lender's balance sheet, MNI understands.

There has been no observed impact from the collapse on Japanese financial institutions and the broader financial system as U.S. authorities have taken measures to maintain the stability of the U.S. financial system. Japanese authorities are gathering information and monitoring developments, including the impact on foreign exchange and interest rate markets. (See MNI BRIEF: Fed Unveils Funding Facility To Relieve SVB Strain)

Apart from the collapse of SVB, Japan’s authorities continue to carefully examine the impact on regional financial institutions from unrealised losses on foreign securities caused by Federal Reserve rate hikes. Some financial institutions have been weighed down by losses but they are unlikely to undermine the stability of Japan’s financial system. (See MNI POLICY: BOJ Alert As Rising Yields Pressure Fragile Banks)

Japanese stock prices, mainly bank shares, were under selling pressure following the collapse of SVB in early trade on Monday.