Press Conference by the Minister for Financial Services

(Excerpt)

22 January, 2002

Q.

Following the meeting with the U.S. Secretary of Treasury Mr. Paul O'Neil yesterday, please elaborate on the issues you explained with special emphasis, or statements by Mr. O'Neil that impressed you.

A.

I explained that the Financial Services Agency (FSA) has been striving to write off so-called non-performing loans (NPLs) from balance sheets since January/February 2001, and has been progressing in line with the concrete Cabinet measures formed in June 2001. Then, I referred to the special inspections which have been taking place due to the heightened need to give further consideration to market valuation when assessing assets, and that the disposal of NPLs has been promoted within such a framework.

I believe that Secretary O'Neil fully understood my explanation as he expressed his appreciation to it. He then broadened the scope of discussion and asked me what kind of measures were being taken for the Japanese economy to return to positive growth.

The discussion was focused on raising productivity, acknowledging its ultimate importance, which was also strongly emphasized by Secretary O'Neil. He suggested that it involves the injection of resources into more productive areas. I totally agreed, and explained that deregulation and regulatory reform of areas currently regulated in the private sector is effective in enhancing the allocation of resources to high-productivity areas, and various government-related projects propelled strongly by Prime Minister Junichiro Koizumi lately, including the reform in the public-related sectors, are aimed at increasing productivity in that sense.