Japan's Experience with Credit Ceilings for Real Estate Lending (Japanese)

In the aftermath of the global financial crisis, the Group of 20 (G20) countries and international institutions such as the International Monetary Fund (IMF) and the Bank for International Settlements (BIS) have frequently discussed macroprudential policies and their relationship to systemic risk. One such macroprudential instrument discussed is the imposition of a ceiling on credit or credit growth to tame real estate booms and the related problems. In Japan, a credit ceiling for real estate lending was introduced in 1990 and phased out at the end of the following year. This regulation is now notorious as many people believe that it caused the bursting of the real estate bubble and led to Japan's lost decade. However, if it had been adopted earlier as a macroprudential policy to control the real estate boom, the outcome might have been different for the Japanese economy and for the reputation of the regulation itself. Since the Japanese financial crisis in the 1990s, the financial system has been reformed. However, it is still necessary to consider Japan's macroprudential policy framework and its coordination with monetary policy. At the minimum, it is imperative to improve the current situation in which there is difficulty for us to see a common understanding on systemic risks among the related organizations such as the Financial Supervisory Agency and the Bank of Japan including whether or not they exist.