Summary of Remarks by Shizuka Kamei, Minister of State for Financial Services, at the Committee on Financial Affairs of the House of Councillors

November 12, 2009

(Introduction)

I, as the Minister of State for Financial Services, would like to make a few remarks on the occasion of the deliberation at this committee.

(Current situation of Japan's financial system)

I would like to begin by explaining the current situation of Japan's financial system.

Since last year, the financial crisis that erupted in the U.S. and Europe has caused the global recession. At present, while some regions have shown signs of economic recovery, the global economy remains in a severe condition. In addition, although the Japanese economy has been picking up, it is short of autonomous factors and remains in a difficult situation such as a high unemployment rate.

The direct impact of the financial crisis on the soundness of Japan's financial system itself has been limited compared with that of the U.S. and Europe. However, we need to keep a close watch on the current situation, including how the financial system will be affected by the difficult economic condition.

(Basic views on financial administration in the period ahead)

Next, I would like to state on my basic views on financial administration in the period ahead.

For the stability of the people's daily lives and the development of the Japanese economy, it is essential for financial institutions to recognize their social responsibility and, taking care to ensure their sound and appropriate business operations, contribute to the sound development of companies. For our part, it is important to conduct financial administration so as to ensure that financial institutions fulfill this responsibility.

Based on these views, we will encourage financial institutions to smoothly perform their financial intermediary function and we will also strive to strengthen the functions of Japan's financial and capital markets and enhance the protection of financial services users.

As it is also important to cooperate with foreign authorities in efforts to prevent a recurrence of the financial crisis and establish a robust financial system, we will continue to actively participate in the discussions on such issues. In doing so, we will consider how to conduct regulation and supervision in light of the characteristics and practices of the individual Japanese financial institutions and the role that they should play in supporting the local economy, and will establish a regulatory framework which is well balanced between Japan and abroad, rather than strengthening regulations in a uniform manner.

(Facilitation of financing)

Under the difficult economic condition, we hear that small and medium-size enterprises (SMEs) remain in the severe financing situations. I believe that we should invigorate SMEs, which sustain the Japanese economy, by providing financial support, thereby promoting employment stability and economic recovery. It is also necessary to stabilize the lives of housing loan borrowers.

Based on these ideas, we submitted the Act concerning Temporary Measures to Facilitate Financing for SMEs, etc., which provides for temporary measures such as requiring financial institutions to expand all possible efforts to modify terms and conditions of loans when they receive requests from SMEs and housing loan borrowers temporarily struggling with loan repayment. I would like to ask you to cooperate in reviewing and voting for this bill promptly so that the people can be ready for the new year without anxiety.

I hope that financial institutions will fulfill their social responsibility and contribute to the facilitation of financing for their customers by voluntarily meeting the requests from SMEs and housing loan borrowers even before the enactment of this bill. The government will conduct appropriate guidance and supervision, as well as implement necessary measures.

I will also urge financial institutions to positively consider using the revised Act on Special Measures for Strengthening Financial Functions if they recognize that it is necessary to increase their capital in order to fully perform their financial intermediary function in their forward-looking management.

(Conclusion)

Since I was appointed the Minister of State for Financial Services, I have led the FSA (Financial Services Agency) employees to follow my basic concept on how to conduct financial administration. In order to respond to the expectations and trust of our citizens, I will make my utmost efforts to stabilize the financial system, protect financial services users and enhance their convenience, and establish fair, transparent and vibrant markets while strengthening cooperation with relevant organizations. I would appreciate the understanding and cooperation of chairman Oishi and all the other members of this committee.

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