A consolidated form of capital requirements is key to ensuring that risks to the financial system as a whole (as compared, say, to investor or policyholder protection) are accounted for. For these firms, then, the ANPR is likely to seek comment on what we have internally been calling the consolidated approach (CA).
US debt instruments are used as reserve assets because of their high credit quality and because the US government bond market is the world’s deepest and most liquid. So it’s no wonder that US government debt benefits from strong global demand, particularly from China. For Japan, most of its public debt is held domestically, which mitigates the risk.