Proposed Bridge Bank System

On June 30th the Japanese Government and LDP approved an outline of a new financial policy which adopts a scheme similar to the US- bridge bank system ("Bridge Bank" scheme). Under the Bridge Bank scheme, the Japanese Government will take over a failed bank until a private financial institution, a corporation, or an individual makes a reasonable offer to take over the failed bank. This proposed scheme, preventing a bank failure from cutting off a vital flow of credit, is designed to protect depositors from the delay of reconstructing bank, which results in stability of the financial system as a whole and to protect sound borrowers of the failed bank from discontinuation of funding when such borrowers can not find another funding institution.