Minutes of the 57th Financial System Council and 45th Financial Subcommittee Joint Meeting
Overview
At the joint meeting on August 31, 2026, members discussed matters raised in consultations on financing for growth companies and insurance systems. With the agreement of all members, the meeting decided to establish two working groups and proceed to detailed consideration of regulatory reform for lending to growth companies, reinsurance captives, and the life insurance safety net.
Key points
- It was decided to begin considering financing for growth companies and insurance systems.
- Two working groups were established, and their chairs were appointed.
- Members supported the need for the systems while calling for consideration of borrower and policyholder protection, risk management, supervision, and moral hazard, among other issues.
Overview
On August 31, 2026, the 57th Financial System Council and 45th Financial Subcommittee held a joint meeting. The consultation concerned consideration of measures including greater flexibility in regulations on business lending, the establishment of a reinsurance captive system, and the future of the life insurance safety net, with the aims of diversifying financing for growth companies and strengthening insurance functions.
With the agreement of all members, the meeting decided to pursue detailed consideration through two working groups. Member Kazuhiko Yamamoto was appointed chair of the group on financing for growth companies, and Professor Hiroshi Suzaki was appointed chair of the group on insurance systems.
Impact
Members said that diversifying sources of financing could promote growth investment and expand foreign currency funding options while helping contain costs. They also expressed the view that reviewing regulations on the premise of digital operations could benefit financial innovation and users.
Details
Topics for consideration of financing included “professional” lending to large companies, participation in syndicated loans by foreign banks and others without domestic licenses, and capital and other requirements under the Nonbank Bond Act. The review would also address digitizing regulations that assume the delivery of paper documents or physical postings. Members called for examining the scope of coverage, genuine business demand, the effectiveness of supervision, protections for lenders and investors, and financial institutions’ risk management.
It was explained that Japan has no domestic reinsurance captive system and that an insurance company license is required to assume risks within the same corporate group, leading corporate groups to establish subsidiaries abroad. Members identified adequate risk management capabilities, taxation, governance, and consideration of corporate size as issues for establishing such a system.
When a life insurer fails, financial assistance for policy transfers and other measures is funded through industry contributions to reserves and government-guaranteed borrowing. If the total amount exceeds those funds, government subsidies may be provided subject to certain requirements. The temporary government subsidy measure was introduced in 2000, and its deadline has been extended 6 times. Members called for consideration of the size and basis of the industry's contribution framework, conditions for providing subsidies, policyholder protection including continued coverage, and moral hazard.