Press Conference by Yuji Yamamoto, Minister for Financial Services

(Excerpt)

January 19, 2007

Q.

In regards to the monetary policy of the Bank of Japan (BOJ), the BOJ decided not to go ahead with another interest rate hike at the Monetary Policy Meeting yesterday. What are your thoughts on this decision? Some people have pointed out that this has left some issues in terms of dialogue between the BOJ and the market or the government. Your views on this will also be appreciated.

A.

Firstly, the BOJ exclusively controls monetary policy and made the judgment responsibly in consideration of the given conditions. In particular, messages from BOJ Governor Mr. Toshihiko Fukui in the past focused on price trends and consumer prices. In that context, the core consumer price index (CPI) was 0.2, whereas the core-core CPI, which excludes energy and institutional factors, was negative. Considering that there is some weakness in the family income and expenditure survey results, there is no inconsistency whatsoever in Mr. Fukui's statement; it makes sense, and the fact that he decided to maintain the status quo was no surprise from my point of view. However, in regards to the second question, what bothers me slightly over the relationship with the government is that the BOJ has some explaining left to do in the future, considering that the BOJ's message last year was to “raise the interest rate in January unless there is a catastrophe.” Moreover, it should not, under any circumstances, have left the impression that it bowed to political pressure. Rather, it should take the view that it is always politically collaborative and that there are no disagreements between the government and the BOJ. It is hoped that a concrete explanation will be given, as I think the BOJ may have to give consideration to this matter and engage in full dialogue with the general public and the mass media in the future.

Q.

What is your perception of the new incident revealed at Dai-ichi Mutual Life Insurance Company relating to the non-payment of medical insurance claims concerning optional extras? How will the Financial Services Agency (FSA) deal with this matter?

A.

Insurance companies and user protection are themes that we should always aim to address as a matter of top priority. It is extremely regrettable that this is still not strictly enforced. However, as they are continually making improvements in terms of governance and management constitution and are submitting improvement plans, we do recognize their stance to making efforts. In that sense, it is such a shame that these facts came to light while efforts were being made. It is hoped that Dai-ichi Mutual Life Insurance Company will provide a sufficient explanation and demonstrate actual improvements in the future.

(End)