Press Conference by Yoshimi Watanabe, Minister for Financial Services

(Excerpt)

September 26, 2007

[Minister's Statement]

I am Yoshimi Watanabe. I was reappointed for the same post.

I have participated in the first cabinet meeting after attending the attestation ceremony at the Imperial Palace. I felt that the atmosphere was very cordial considering that this was the first cabinet meeting. When I rated the candidates, I established rating criteria such as ''luck'' and ''charm,'' and I said that Mr. Fukuda had luck, while charm belonged to Mr. Aso. However, I have found out that Prime Minister Fukuda is a very charming person, and I have to revise my rating slightly. This is all I have to say.

[Questions and Answers]

Q.

Prime Minister Fukuda, when he was running in the LDP presidential election, spoke of deliberations on a plan to freeze an increase in the burden of medical costs for the elderly and indicated a cautious stance on the use of revenues earmarked for road construction for general purposes. Could you tell me which of the reforms that have been implemented since the Koizumi government the Fukuda government will seek to revise? Also, do you yourself think there is any reform that will have to be revised?

A.

I think some things should be done strictly as determined previously and other things should be handled flexibly. Naturally, we need to act in ways to reflect the people's wishes and keep a careful watch far and wide on the people's daily lives. Therefore, regarding points that the ruling parties agreed should be revised, I expect that revisions will be implemented accordingly under this cabinet. I do not think that in my areas of responsibility, there is anything regarding which a policy change or a revision is necessary.

Q.

Prime Minister Fukuda has spoken of a need to avoid slackening efforts toward fiscal reconstruction. On the other hand, there is an argument that there is a need for things like relief aid to ease pains and compassion. Do you think these two needs can be reconciled?

A.

This concerns how much money we are ready to spend, and I expect the amount of money needed will not be so large as to require a major change in the fiscal reform policy.

Q.

Will the reforms of the civil servant system and incorporated administrative agencies that have been promoted under Prime Minister Abe be carried out in the current form, without any trace of Prime Minister Fukuda's own distinctiveness added to it? Or is it not possible that a certain degree of policy change will become necessary as Prime Minister Fukuda pursues his own distinctiveness?

A.

As the agreement between the ruling parties includes items concerning administrative reform and civil servant system reform, I think it is quite inconceivable that the policy that has been pursued until now will be revised significantly.

Q.

Today, an experts' meeting on administrative streamlining and efficiency will be held to hold hearings with five ministries. Regarding the reform of incorporated administrative agencies, did you discuss anything with the Prime Minister today or receive any instruction from him?

A.

I did no talk with him about anything specific or receive any specific instruction from him. We are just starting hearings today. As there are about five meeting groups for which I am responsible, I intend to provide you soon with information concerning scheduling issues and the contents of the meetings.

Q.

At last night's press conference, you predicted that there will be no substantial policy change. Although you may be tired of hearing this question, is it not possible that there will be a policy change under Prime Minister Fukuda?

A.

I assume that my reappointment means that he wants me to continue the work I have been doing. Therefore, I do not think that the reappointment was made with a major policy change in mind. In a chat I had with him before today's attestation ceremony, we talked about my father, who was appointed to the cabinet for the first time, as the Health and Welfare Minister, under the first cabinet of Prime Minister Fukuda (the incumbent Prime Minister's father). I think that this was probably around 1976. As that was his first experience as a cabinet member, my father was quite at a loss for what to do. Prime Minister Fukuda remembers my father of around that time well and told me, ''Your father had a violent temper.'' However, as my temper is not as violent as my father's, I expect to be allowed to continue my policy of ''compassionate structural reform.''

Q.

How does Prime Minister Fukuda himself and the Fukuda cabinet as a whole view financial issues?

A.

Yesterday, I had an opportunity to talk with him on the phone. As he told me that I will be put in charge of administrative reform, I said, ''There are a lot of ongoing tasks regarding financial issues, too,'' to which he replied, ''I will talk about your areas of responsibility when you come to my office.'' When I went to the Prime Minister's office, I was told, ''Your areas of responsibility include financial issues.'' This was all we talked about financial issues.

Q.

Is there any difference between how the Koizumi and Abe cabinets viewed financial issues and how Prime Minister Fukuda views such issues?

A.

I do not think there is any particular difference. What the Prime Minister has instructed me to do is to enhance the international competitiveness of the Japanese market. I think this is a task that should be taken over from the previous cabinet and continued. Enhancing the international competitiveness of Japan's financial and capital markets tops the list of instruction items for me. The second item is the establishment and management of frameworks for ensuring the safety of the people, such as smooth implementation of the reform of the money-lending system for the purpose of the prevention of multiple debts and the provision of relief aid for debtors and appropriate enforcement of the Financial Instruments and Exchange Act. Therefore, it is not true at all that the Fukuda cabinet is different from the previous cabinet or that there is a policy change.

Q.

When you spoke of your rating of the candidates earlier, you said that your view of Prime Minister Fukuda has changed somewhat with regard to the criterion of charm. What is your impression of the Prime Minister with regard to the criterion of commitment to reform?

A.

From the first, I thought he was committed to reform. Following my reappointment, I have no impression at all that his commitment to reform has declined.

Q.

This weekend, on Sunday, the Financial Instruments and Exchange Act will be fully put into force. Could you tell me how financial institutions are responding to this and how you want them to cope with this at this time?

A.

I hear that there is some confusion at some financial institutions as to how to respond to the enforcement of the Financial Instruments and Exchange Act. I am also aware of the view that this is too tough. However, when a new framework is introduced, I think such things are inevitable. Therefore, I want them to understand the purpose of this new framework, acquire, as soon as possible, the habit of providing appropriate explanations to customers as it is quite natural to do so and attract risk money into the market. I want them to act in ways to accelerate this trend.

Q.

Regarding the enhancement of the international competitiveness of the financial and capital markets, there are three months left before the plan for this is drawn up by the end of this year. How do you think this matter should proceed?

A.

The Financial System Council is in the process of formulating the plan for enhancing the competitiveness of the financial and capital markets. Meanwhile, as I have launched a new study group on the subprime loan problem, I would like to proceed with the study on the enhancement of the competitiveness of the markets from this viewpoint. as well. For the moment, we are conducting deliberations with a view to formulating the plan by the end of the year in light of matters pointed out by the Financial System Council.

Q.

Regarding your rating of the candidates, was there anything specific that made you think that Mr. Fukuda has charm?

A.

There were a lot of specific things. There is always laughter. Although I may be chided for saying this, it seems to me as if he is the dunce character (as in a comedy duo), while the Chief Cabinet Secretary is the sharp one. They may be a very good couple.

Q.

You said that today's cabinet meeting was held in a cordial atmosphere. Could you tell me about specific episodes or specific exchanges of words?

A.

As for the contents of the cabinet meeting, please ask the Chief Cabinet Secretary.

Q.

Prime Minister Fukuda himself described this cabinet as a ''cabinet with its back to the wall,'' and newspapers floated various labels around. Do you have any name that fits your view of this cabinet?

A.

I think the reference to ''the back to the wall'' was meant to stress the need to enhance our defense in a prudent manner first of all. After that, I think we should look for an opportunity to move on to the offensive. For the moment, as the support rating for the government has declined sharply, what is needed to stem the decline will be defensive tactics such as a ''clinch'' (as in boxing). And then, after recovering our poise, we should look straight ahead.

(End)