Policy Statement by Taro Aso, Minister of Finance and Minister of State for Financial Services, at the Committee on Financial Affairs of the House of Councillors
October 18, 2016
I am Taro Aso, Minister of Finance and Minister of State for Financial Services. To start this meeting of the Committee, I will make a brief address.
(Current state of the Japanese economy and basic approach to fiscal policies)
With respect to the current state of the Japanese economy, efforts by the Abe Cabinet have improved economic conditions, including the significant improvement of the employment and income situation. However, as structural factors such as the declining birth rate and aging population as well as the slump in potential growth, there is a lack of strength in private consumption and business investments. Also, risks of declining demand in the global economy and slowdown of global economic growth are concerns due to the sluggish emerging market economies and the outcome of the referendum on the UK’s membership in the EU.
Considering such current status of the economy, “Economic Measures for Realizing Investment for the Future” was approved by the Cabinet on August 2.
It was followed by the Diet approval of the second supplementary budget for FY2016, which was compiled based on the "Economic Measures for Realizing Investment for the Future."
In our all-out endeavor to work out policies against the influence of risks in the global economy, we decided to postpone the hike of the consumption tax rate to 10% to October 2019. As a result, we will postpone the introduction of reduced tax system and amend other related policies.
We will adhere to the fiscal consolidation target of FY2020 and steadily implement initiatives towards overcoming deflation and revitalizing the economy, and expenditure and revenue reforms that sufficiently take account of the roadmap for reforms, based on "The Plan to Advance Economic and Fiscal Revitalization."
(Basic concepts on the current financial regulatory policy)
Next, I would like to elaborate on the current financial regulatory policy.
In order to overcome deflationary recession and revitalize the economy, we will take various initiatives. For strengthening financial intermediary function, we will review the monitoring approaches to change the impression of the Financial Services Agency from the Financial Sanctions Agency to the incubator for financial business.
Furthermore, we will take initiatives toward achieving improvement in corporate productivity and structural reform by ensuring effective financial intermediation and supporting business turnaround. Moreover, we will transform the flow of funds “from deposit to investment.”
In addition, we will, responding to the changing landscape of financial and capital markets, extend some temporary measures that highly contribute to the stability of financial functions in response to the changing landscape of financial and capital markets.
Japan's financial system as a whole is sound and stable at present, and we will, with vigilance, keep a close watch over the impact of domestic and international economic developments and market trends on Japan's financial system.
(Bills to be submitted to the extraordinary Diet session)
The bill which we will ask you to deliberate on, related to the Ministry of Finance, is the Bill for Partial Revision of Acts, including partial revision of the Consumption Tax Act for the fundamental reform of the taxation system to achieve a stable source of revenue for social security.
Also, the bill related to the Financial Services Agency is the Bill to Partially Amend the Act on Special Measures for Strengthening Financial Functions, etc., to ensure the stability of financial functions in response to the changing landscape of financial and capital markets.
We will explain the details of these bills later, so I hereby ask you to deliberate on these matters and give your approval.
*Titles of the bills are provisional translations based on their Japanese titles.
I am determined to continue, with your support, to do my best in policy management. I would appreciate the understanding and cooperation of Chairman Fujikawa and all other members of the committee.
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