Press Conference by the Minister for Financial Services

(Excerpt)

6 November, 2001

Q.

The debate about the further postponement of the restart of the pay-off system is rekindling, based on claims that the financial conditions of local financial institutions are so critical that they might collapse one after the other following the restart. Do you have any concerns or worries in that regard?

A.

The restart of the pay-off system was postponed because credit unions were placed under the government's supervision, as a matter of course. As the government had taken over local authorities' responsibilities to supervise the credit unions, more time was required to strictly conduct inspections by the government and take necessary measures based on the findings, especially including recapitalization. That is why it was postponed for a year to March 31, 2002, and in the meantime, we are working on completing those tasks. We are currently developing a structure to make all financial institutions financially sound by April 1, that is, the beginning of the new financial year. As you may already know, the development of an infrastructure to prepare for the restart of the pay-off system involves the inclusion of offsetting provisions in deposit contracts and the full installation of aggregation system of client depositors. It is important that such measures are taken in an orderly manner by March 31.