October 14, 2008

Statement by Shoichi Nakagawa
Minister of Finance and Minister of State for Financial Services

1. At the meeting of the G-7 Finance Ministers and the Central Banks Governors on October 10, we agreed to take decisive action and use all available tools for stabilizing the financial markets and adopted "Plan of Action" consisting of 5 items. At the meeting, I emphasized two major points. First, capital injection into financial institutions by utilizing public fund is the most important measure among the policy packages for avoiding the materialization of systemic risk. Second, we expect the IMF to play a key role flexibly and actively to cope with the current crisis, and Japan stands ready to supplement needed funds if the IMF requires additional resources.
2. While Japan's financial system remains relatively stable and sufficient safety nets are already in place, I will continue to monitor on a heightened alert the impact of the recent rapid fall in the stock markets on Japan's financial sector and real economy. Based on the Prime Minister's instruction, I am determined to take measures necessary in a prompt manner, including the following:

   • (i)   The restrictions on corporations' purchase of own stocks will be relaxed promptly, from the standpoint of stabilizing the markets.

   • (ii)  Consideration will be given expeditiously to the enhancement of disclosure on information about short selling at the exchanges, to be followed by prompt implementation of the necessary measures.

   • (iii) Temporary suspension of the sale of public sector-owned stocks will be considered and implemented. In addition, I will request that the Bank of Japan take similar measures with respect to the stock it owns.

3. As part of the realization of the G-7 Plan of Action, consideration will be given expeditiously to enhancing smooth financing of small- and medium-sized enterprises (SMEs) by regional financial institutions through strengthening and best use of the Act on Special Measures for Strengthening Financial Functions, from the standpoint of ensuring smooth financing in local areas. In addition, consideration will be given to extending government support for the safety net with regard to life insurance companies, which is in place to protect the interest of insurance policyholders, even after the current deadline of March 31, 2009.
4. As to the SME financing, in addition to the Financial Services Agency's ongoing efforts to understand the current situation of SME finance in close cooperation with the Small and Medium Enterprise Agency, I will invite the executives of financial institutions to a meeting this Wednesday, October 15, to request once again that they maintain adequate financial intermediary functions. In addition, I will remain flexible to consider any additional measures in order to respond to further developments of the situation in a timely and appropriate manner.
5. Additional economic measures are currently being considered at the ruling parties. As soon as the measures are put together by the ruling parties, I, as a member of the government, am determined to take them seriously and respond accordingly.