BOJ: No signs of excessive risk taking or overheating in credit

In its semi-annual financial system report on Monday, the Bank of Japan (BOJ) kept its assessment that Japan’s financial system has been maintaining stability and that the bank doesn’t see an environment of a property bubble.

Key Quotes:

"On the whole, we are not in an environment of excessive risk taking or overheating in credit." 

"Still, we need to monitor risks posed by the property sector and competition among banks to extend credit."

“It is necessary to examine both the risk of overheating -- excessive accumulation of macro risks and exuberant asset prices -- and the risk of a gradual pullback in financial intermediation due to a persistent decline in profits.” 

“If the recent trend of declining profits persists, the number of financial institutions experiencing an erosion of their loss-absorbing capacity could increase.”

“Although the real estate market currently does not appear to show signs of overheating on the whole, it has been observed that some transactions in metropolitan areas took place at lofty prices and came with low investment yields.”