Provisional translation

Press Conference by Shoichi Nakagawa, Minister of Finance and Minister for Financial Services

(Excerpt)

November 25, 2008

[Opening Remarks by Minister Nakagawa]

I did not report any particular matter at today’s cabinet meeting.

I have an additional matter to report to you with regard to the FAQ regarding the regulation on insider trading that we published on November 18. We notified the TSE of this FAQ on Friday. The regulation on insider trading related to own stock repurchases is very strict and restrictive. Of course, insider trading by executives and employees of listed companies should not be tolerated, yet as the regulation is very strict, we made a FAQ in order to prevent excessive regulation and asked the TSE on Friday to convey it to listed companies.

[Questions and Answers]

Q.

How do you view a bailout plan for Citigroup announced yesterday by the U.S. government, under which an additional capital injection will be given to the company and government guarantee will be provided for its distressed assets? Considering the capital injection given last month, some people point out that the U.S. government’s handling of this matter has been haphazard and doubt whether the new measures are sufficient. What is your view in this regard?

A.

In light of Japan’s experiences, we think highly of the U.S. government’s implementation of various large-scale measures, and I think that the market has a similar view. As for whether these measures are sufficient, we will need to keep close watch on future developments, although we hope that the measures will turn the financial crisis around. I think that the U.S. government naturally intends to do so, and we will keep watching the situation carefully.

Q.

U.S. President-elect Obama has nominated Mr.Timothy F. Geithner of the Federal Reserve Bank of New York the position of Treasury Secretary. Could you give me your opinion of him, as he will be an important counterpart to you? Do you intend to contact him immediately in order to discuss how to deal with the financial crisis?

A.

I would like to contact him immediately if I could. However, as he has not formally taken office, I do not know what to do, frankly speaking. Although I have not met Mr. Geithner in person, I hear that he is a very capable man and knows well about the situation of Japan in the 1990s. So, I believe that he is suited to properly deal with the financial crisis in the United States.

Q.

The bill for amendment of the Act on Special Measures for Strengthening Financial Functions could be shelved if the deliberations on it drag on beyond the end of the year. If such a situation occurs, how do you intend to act, as small- and medium-size enterprises continue to struggle?

A.

I should have said this earlier I spoke about the matter at the informal meeting of cabinet ministers. Even~ if the bill is to be enacted automatically, the enactment date would be January 5. This would be after the turn of the year. As we need to make preparations such as drafting cabinet orders and cabinet office ordinances, we must act quickly out of consideration for companies struggling to raise necessary funds and companies needing year-end funds. Although we have already issued an instruction for acting as quickly as possible, there will be procedural work to be done after the bill’s enactment. As the application for capital injection must be screened before capital is actually injected, leading to the provision of loans, I fear that time is running out. So, I have instructed the FSA again to make sure that funds properly flow to where needed by the end of the year, although the bill is still under deliberation in the Diet. As the bill is intended to meet the expectations of SMEs across Japan and support struggling SMEs, I hope that all parties will cooperate to prevent a parliamentary gridlock from aggravating Japan’s economic condition, by enacting this bill in time for the end of the year, as I said several times at committee meetings last week. I strongly hope that at least, it will be ensured that necessary funds, in the form of loans, are provided by the end of the year.

Q.

Regarding the instruction that you gave the FSA in relation to the provision of year-end funds, specifically what...

A.

I did not give any specific instruction, as the bill is still under Diet deliberation. If the procedural work takes too much time, if it is prolonged beyond the end of the year - it is not clear when the bill will be enacted - we will have to bear responsibility. While the preparations we can make in the current situation are limited. I think that we must make as much preparation as possible to prevent this matter from being prolonged beyond the end of the year, and I hope that this bill will be enacted as soon as possible after sufficient deliberations at the Diet.

(End)