Press Conference by the Minister for Financial Services

(Excerpt)

8 February, 2002

Q.

Prime Minister Koizumi referred to BOJ's roles in his reply concerning measures against the financial crisis. How does the Financial Services Agency prepare against the crisis, for example to make emergency liquidity to the troubled institution and re-injection of public funds?

A.

I believe maintenance of the financial stability is a basic responsibility of the central bank. In addition, Article 102 of the Deposit Insurance Law lays down responsibilities against the financial crisis. I consider that the primary key is the prevention of the crisis from occurring for BOJ and the Financial Services Agency to share the responsibilities and cooperate in taking measures.

Q.

Please tell us what do you think about the recent simultaneous declines of stock and bond prices, and exchange rate, and how do you assess their impacts on Japanese financial institutions.

A.

Depreciation of yen and falls in bond prices, including government bonds, are issues of market risks, and I believe the Government has dealt with these issues properly.

As for stock prices, Japanese banks have traditionally sold stocks in February, and this time, unwinding of cross-holding is added to this conventional trend. Needless to say, all stocks banks want to sell might not necessarily be easily sold, which has, in my view, negative effects on banks themselves.

The Banks' Shareholdings Purchase Corporation has been established to address these situations. February is a special month. If the Corporation fails to work effectively in this month, the public will blame us. Although it may take a little more time for the Corporation to actually start functioning, I strongly hope the Corporation to positively proceed preparations for starting activities as soon as possible.