Press Conference by the Minister for Financial Services

(Excerpt)

11 September, 2001

Q.

Taking today's stock price level into account, do you consider the current situation of the Japanese financial system a serious state, or to be on course towards stability and restructuring? Also, there are still some talks going on about the injection of public funds. What is your opinion on this?

A.

To be honest, we are concerned about the extent to which the stock price level may fall. The model we calculated at the administrative level indicates an extremely low level. As a matter of fact, however, it would not lead to a serious situation by itself, as the index-linked ratio of bank's bolding stock to Nikkei 225 is extremely low contrary to expectations, in the context of the explanation given by Commissioner of the Financial Services Agency Shoji Mori yesterday. This is based on a certain simulation. On the other hand, we also work on projections of non-performing loans (NPLs), which are expected to increase in amount in a deflationary economy, as a matter of course. I believe that it is vital to carefully observe the combined effects of these factors.

My opinion on the issue of injecting public funds is as stated previously, and it is not worth repeating. From your expression, I gather that my response is dissatisfactory. As I have mentioned in the past, in light of the rule of law, what we will do about problems affecting banks on an individual basis is going to be different, of course, from what we will do in the event of an undesirable situation in the economy as a whole, or the stock price as previously stated. We are carefully observing the development of this situation.