TOKYO, April 10 - Japan's finance minister said on Friday that private credit is not a significant domestic threat at present, but that the sector's broader risks may be raised at next week's Group of Seven finance ministers meeting in Washington.
At a routine press briefing, Finance Minister Satsuki Katayama said Japan's exposure to private credit is limited. "It's not that there is no investment at all, but we do not view this as a major issue domestically at this point," she said, stressing that the country's direct involvement in the private credit market is not particularly large.
Katayama's remarks coincide with ongoing checks by Japan's Financial Services Agency into how major domestic financial institutions are exposed to private credit. Those reviews are taking place amid growing concern about strains emerging across the roughly $2 trillion global private credit industry.
She added that she receives regular briefings from the financial watchdog and follows developments closely. Katayama said questions over whether risks are accumulating and whether monitoring is adequate could be raised when finance ministers from the G7 convene next week in Washington.
Even so, the finance minister told reporters she does not believe the present situation has escalated into problems comparable to previous crises.
In the United States, private credit funds have been dealing with elevated redemption requests as anxious retail investors withdraw funds, driven by worries about transparency, valuation practices and disruption linked to artificial intelligence. Those developments form part of the global picture that Japanese authorities are tracking.
Japan's own private credit market remains relatively small, a function of corporate borrowers' continued access to traditional bank lending. Nonetheless, Japanese banks have increased financing to international private credit funds in recent years as they seek higher returns.
Context and implications
The finance minister's comments portray a government view that, while domestic exposure appears limited, vigilance is warranted. Regulatory reviews by the Financial Services Agency signal active monitoring of potential channels of contagion, notably through banks that have provided financing to global private credit vehicles.