Press Conference by Kaoru Yosano, Minister of State for Economic and Fiscal Policy and Financial Services

January 20, 2006

Minister's Statement

The Cabinet met and held discussions as planned. At the close of the Cabinet and ministerial meetings, the Prime Minister urged each of us ministers to vigorously perform our respective duties while being mindful of our health, as the Diet session begins today.

Mr. Nishimuro, Chairman and CEO of the Tokyo Stock Exchange (TSE), and Mr. Yamashita, President and CEO of the Japan Securities Clearing Corporation (JSCC), will come to the Financial Services Agency (FSA) this afternoon. The meeting is scheduled at 13:20.

The TSE is set to take measures including shortening the afternoon trading session by 30 minutes today. This situation is not normal. It is hoped that the situation will be restored back to normal as soon as possible, as it is an urgent issue.

The TSE has been criticized both in Japan and overseas for what has been happening. Restoring confidence in the TSE is crucial to the Japanese economy, and is extremely important for the purpose of restoring the reliability of TSE itself as a stock exchange. TSE must lavishly make investments to improve the reliability and processing capacity of the system, as I have repeatedly stated since the system crashed in November. I intend to strongly inform Mr. Nishimuro of our point of view on this matter.

Q&A

Q.

In regards to this case, the TSE has announced a number of countermeasures since the suspension of trading. What is your evaluation of the measures presented by the TSE at this point, to the extent that they have been revealed so far, such as system enhancements and partial restrictions on trading?

A.

System enhancements understandably take a certain amount of time, due to the preparation of machines, the development of systems and so on. However, the time taken should be minimized to prepare against this kind of situation. Mr. Nishimuro publicly stated yesterday that the system's processing capacity will be substantially enhanced ahead of schedule, so I will ask him about the specifics tomorrow.

Q.

As for the problem of counterfeited and stolen ATM cards, Mizuho Bank announced its policy yesterday to apply the compensation provisions of the Depositor Protection Law retroactively to cases over the past two years. Some regional banks have also announced that they will do the same retroactively to cases over the past two years. What is your evaluation of their actions? Also, how should banks deal with past compensations with respect to counterfeited cash cards?

A.

The problem of counterfeited cash cards, especially the problem of responsibility of a financial institution and a depositor, was one of the difficult problems when I was Chairman of the Policy Research Council of the Liberal Democratic Party (LDP).

In that sense, it is great that Mizuho announced its policy to compensate losses in a retroactive manner. In many cases, victims of ATM card counterfeit suffered losses that are almost impossible to predict, notwithstanding some carelessness on their part. I think it is excellent for depositors that the bank side gives some kind of compensation against such extremely unpredictable events.

Q.

There have been some reports about the non-payment of insurance money by non-life insurance companies that have come to light as a result of inspection by the FSA...

A.

As I have not been informed about this matter, I cannot comment on it. I will talk about it at the next press conference once I have been briefed by the FSA staff.

(End)