Japan's non-performing loans undermining economy

Tokyo could be in danger of losing its standing as a top financial centre, unless efforts are made to restructure the economy and cure Japanese banks' vast non-performing loans problem, warned Bank of Japan official Hiroshi Nakaso, speaking at Risk Waters Group's inaugural Japan Risk conference in Tokyo today.

Nakaso, associate director of the financial markets department and international department, argued that while non-performing loans (NPLs) have haunted the Japanese banking system since the bursting of the bubble economy in the early 1990s, the plight of banks is steadily worsening following a continued decline in the Japanese economy. "Now we are seeing more and more loans that were once classified as normal becoming non-performing loans as a result of the stagnation of the Japanese economy,"