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Japan's financial system has overall been maintaining stability, says BOJ

Japanese banks have sufficient capital bases and stable funding bases to withstand significant stressesThat includes situations equivalent to the global financial crisis that would cause major corrections in financial marketsHowever, uncertainties remain high regarding the formulation of economic policies in each jurisdiction, geopolitical risks and developments in global financial marketsFinancial institutions need to be vigilant against the materialisation of various risksFull reportThe overall assessment remains as it was in April. So, there’s not really anything new here to scrutinise with the BOJ maintaining that the current level of uncertainty impacting the financial system staying heightened.
This article was written by Justin Low at investinglive.com.

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💡 DMK Insight

Japanese banks are positioned well, but global uncertainties could shake markets. While it’s reassuring to hear that banks have solid capital and funding bases, traders should keep an eye on the geopolitical risks and economic policy uncertainties that could trigger volatility. If we see a major correction similar to past financial crises, it could lead to a ripple effect across global markets, including forex and crypto. The interconnectedness of these markets means that a downturn in one could impact liquidity and trading conditions in others. Watch for any shifts in economic policy announcements or geopolitical developments, as these could serve as catalysts for market movements. Key levels to monitor would be the stability of major currency pairs and crypto assets, particularly if market sentiment shifts rapidly in response to news. In this environment, having a risk management strategy is crucial. Traders should be prepared for potential volatility spikes and consider adjusting their positions accordingly.

📮 Takeaway

Keep an eye on geopolitical risks and economic policy shifts; they could trigger volatility in both forex and crypto markets.

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