Press Conference by Yoshimi Watanabe, Minister for Financial Services
April 11, 2008
[Opening Remarks by Minister Watanabe]
Good morning. Please ask me questions.
[Questions and Answers]
The G-7 meeting (meeting of the finance ministers and central bank governors from the Group of Seven major countries) is scheduled to be held (this weekend) in Washington. I expect that the meeting will focus on what measures to take in order to stabilize the financial system in light of the developments since the G-7 meeting in February in Tokyo, such as the collapse of Bear Stearns. As you have been pointing out the payment ability issue, what kind of discussions would you like to take place at the G-7 meeting in this regard?
The important thing is to take action on a global scale. If individual countries act in their own different ways, it would not work well. In this respect, as the FSF (Financial Stability Forum) is expected to issue its report at the same time (with the G-7 meeting), I hope that global action will be taken appropriately. It is important to take a forward-looking, bold approach, rather than resorting to makeshift, stop-gap measures. The lesson of Japan (the non-performing loan problem) is valuable. This (subprime mortgage problem) may be different from the case of Japan because the former is centered around securitization technique while the latter concerns the "hold model" (a business model in which banks hold loan claims on their balance sheets). Nonetheless, both problems boil down to the same issue: damage to the banking system through the erosion of capital. We should engage in efforts to enlighten other countries about the lesson of Japan.
Concerning the issue of the appointment of the Bank of Japan governor, which was at last resolved this week, suggestions have been made that in order to avoid confusion like this in the future, the House of Representatives might be given precedence (over the House of Councillors) with regard to Diet approval of the appointment of the BOJ governor. What do you think in this regard?
Since this is a matter of Diet approval, I would like to refrain from commenting on it. The scope of matters that require Diet approval depends on custom. I suppose that as the scope is determined by custom, there is no clear legal basis as to which matters require approval and which matters do not. Diet approval functions as a check on the process of nomination and appointment by the government. If so, approval would be necessary for the dismissal, too. In the case of the BOJ, there is no legal provision for the dismissal (of the governor), which means that the position is guaranteed - or I should say that independence is ensured. Therefore, once a decision is made on the appointment, it means there will be no change for five years, and I think issues like this are matters to be debated.
Today, the Foreign Exchange Council (Council on Customs, Tariff, Foreign Exchange and Other Transactions) will hold a meeting (on the Children's Investment Fund's plan to acquire shares in Electric Power Development Co. (J-Power)). What do you think of this issue in relation to foreign investment in Japan?
As I said before the Diet yesterday, this is a matter to be decided through consultations between the Minister of Economy, Trade and Industry and the Minister of Finance. I am not involved in this at all.
To repeat what I said yesterday, regarding rules on foreign investment in Japan, there is a need to impose restrictions according to the public nature of businesses and projects. On the other hand, the government is now promoting efforts to strengthen the competitiveness of Japan's financial and capital markets and to revitalize the markets as a matter of top priority. It is important to ensure consistency between these two matters. It would be undesirable to create the impression in the eyes of market players in and outside Japan that Japan is a closed country. Both the Ministry of Economy, Trade (METI) and Industry and the Ministry of Finance (MOF) should provide clear and easy-to-understand explanations.
Another question about the same issue. Some people have said that this should be discussed more openly, with the participation of more people, rather than being deliberated by a governmental council. What do you think in this regard?
I think that restrictions like this are applied in accordance with the rules set by the OECD (Organization for Economic Cooperation and Development). Therefore, regarding this issue, which will be deliberated by the Foreign Exchange Council today, METI and MOF, which are responsible for making a policy decision on this issue, should fulfill their accountability obligations. I would like them to provide explanations that satisfy market players.
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