Japan’s Financial Services Agency is suddenly obsessing over something the Tokyo establishment never saw coming: social-media-fueled bank runs.

Watching the ways in which app-based chatter upended Silicon Valley Bank spooked Japanese regulators, and understandably so. The same goes for observing how social-media traffic can conjure viral popularity out of thin air for shares of largely forgotten companies like AMC and GameStop.

No developed economy, arguably, favors stability and financial-market decorum more than Japan. And few, if any, face greater concerns about hidden cracks than Japan with 100-plus mostly fragile regional banks in harm’s way.

Hence the FSA’s move to stress test banks’ wherewithal to withstand runs on deposits caused by discussions and posts on Reddit, Facebook, X (formerly Twitter) and other platforms. And it’s about time, particularly with the sliding yen unnerving global markets.

Sure, the yen’s move to 150 to the dollar is as much about the U.S. as trends in Japan. The Federal Reserve’s 11 tightening moves in 18 months vastly widened the gulf between U.S. and Japanese interest rates. U.S. growth also has outpaced Japan’s.

Yet few market prices tend to tell an economy’s story better than exchange rates. It’s complicated, considering the Bank of Japan has been stuck at or below zero rates since the late 1990s. But the yen’s trajectory says much about the low level of confidence foreign investors have in Japan’s long-term prospects.

This week, local media explored the two-years-in-office mark for Prime Minister Fumio Kishida. The basic take is that he’s restored stability to Tokyo politics but has been thoroughly underwhelming on the economic reform front.

Luckily for Kishida, the benefits of upgrades to Japan’s corporate governance policies beginning in 2014 kicked in on his watch. In recent months, these reforms and ultraloose BOJ policies drove the Nikkei Stock Average to 30-year highs. The rally even attracted the likes of Warren Buffett to bet on Japanese shares.

Yet the stock boom isn’t enriching the broader Japanese population. It’s a reminder that trickle-down economics doesn’t work any better in 2023 than it did in 1983. Nor is it papering over the cracks in the financial system for which FSA officials are now searching.

The biggest surprise post-SVB is that it’s taken six or seven months for Tokyo regulators to stress-test a system that has never fully gotten over the fallout from the implosion of the 1980s “bubble economy.”

The most obvious metric: Japan is still trapped in quantitative easing policies. After 23 years of relying on these financial training wheels, the economy can’t ride on its own.

A big risk factor is Japan’s regional banking system. For at least a decade now, Tokyo regulators have been trying to prod these 100-plus institutions serving second- and third-tier cities and prefectures to consolidate. And to harness technology disruption to streamline and increase efficiency.

All too many of these banks are in less vibrant economic regions where populations are aging and shrinking. And where industries have been hollowed out by companies preferring to headquarter in Tokyo, Osaka, Yokohama or other metropolises.

Government after government urged regional lenders to consolidate, cut costs and strengthen balance sheets. It offered incentives to merge, including paying additional interest on lenders' BOJ deposits. Little has worked.

With less business to go around and competition intensifying, many regional lenders took to loading up on bonds rather than increasing lending. This dynamic helps explain why the BOJ’s titanically large easing moves don’t get the traction that Governor Kazuo Ueda or predecessor Haruhiko Kuroda hoped.

Students of how SVB got into trouble also might find this arrangement familiar. Now, as US yields rise and the BOJ mulls normalizing rates, it stands to reason that Tokyo is keen to gauge vulnerabilities to rising yields.

The specter of higher borrowing costs is a bigger deal in Japan than most major economies. Tokyo, after all, has the most crushing public debt burden among industrialized nations.

Over time, government bonds became the biggest financial holding of banks, companies, endowments, insurance funds, pension funds, universities and the giant postal system. If rates spiked, the fallout would be fast and frightening.

In theory, many, if not most, of Japan’s regional lenders are considered too big to fail. The good news is that most individual deposits in Japan are insured. SVB’s problem was that it was too exposed to large, uninsured deposits from startup companies.

But as Nikkei Asia reported on October 3, Tokyo wants a reality check on the risk of social-media-fueled bank runs. In the past, bank runs tended to happen during business hours.

As one senior FSA official told Nikkei: “In an age where you can withdraw your deposits with a single tap on your smartphone, there is an ample possibility that such a crisis could occur in Japan.”

Nikkei reports, too, that rising long-term rates are eroding unrealized gains on securities held by some of Japan’s regional banks. The worry: amid chaotic markets, fragile banks could struggle to tap liquidity. And selling government bonds at a loss may only exacerbate a weak institution’s credit troubles.

None of this means Japan is headed for a crash. But it does raise the odds that the greybeards running Tokyo’s ministries may soon find themselves fearing smartphones more than hedge funds.