Japan banks urged to brace for Fed hike

Tokyo

JAPAN'S financial regulator is urging banks to strengthen safeguards against potential market turbulence from a US interest rate hike expected later this year, according to a document seen by Reuters.

Policymakers believe Japan's banking system remains sound with no immediate signs of financial imbalances or excessive risk-taking. But with massive holdings of Japanese government bonds (JGB) and increased exposure to overseas lending, Japanese banks remain vulnerable to losses if interest rate hikes by the Federal Reserve, expected to begin this year, trigger a spike in global bond yields.