Press Conference by the Commissioner

(Excerpt)

1 July, 2002

Q.

In regard to the management of banks and the level of stock prices, what is your view on the current level of stock prices, which is hovering at just a little over 10,000 yen, and the impact it will have on banks?

A.

In light of the mark-to-market accounting practices, the level of stock prices has a large impact on the soundness of banks, as a matter of course. In that sense, we are carefully monitoring it on a continuous basis.

The TOPIX index, which was at roughly 1,060 in the end of this March, has fallen just below 1,000 recently. However, its impact on the capital adequacy ratio of major banks will be quite limited. Nonetheless, stock prices under the mark-to-market accounting regime are extremely important. In order to enhance the underlying strength of banks so that they will not be affected by stock prices, it is important for them to further accelerate the reduction of stockholding risks without being constrained by the September 2004 deadline set forth by law.