Press Conference by Shozaburo Jimi, Minister for Financial Services

(Excerpt)

(Friday, January 28, 2011, from 9:42 a.m. to 9:48 a.m.)

[Questions & Answers]

Q.

Regarding a comprehensive exchange, the Financial Services Agency (FSA) indicated in an interim report released in December last year that it would decide its policy by the end of January. As January is drawing to a close, could you tell me about future prospects and the FSA's approach to consultations with the Ministry of Economy, Trade and Industry and the Ministry of Agriculture, Forestry and Fisheries?

A.

We are making serious efforts to make a decision by the end of January. Today, we consulted with the Minister of Agriculture, Forestry and Fisheries and confirmed that political leadership must be exercised following the cabinet reshuffle.

In any case, as this is part of the comprehensive economic package, we must submit a relevant bill to the ordinary session of the Diet in 2012 under the New Growth Strategy. We will not submit it to the current ordinary session of the Diet. As it is stipulated that the bill should be submitted to the ordinary session of the Diet in 2012 at the latest, we are making serious efforts to meet that deadline.

Q.

Yesterday, Standard & Poor's announced a downgrading of the credit rating of Japanese government bonds. As financial institutions own a large amount of government bonds, there are concerns about the possible impact of the downgrading. Could you comment on that?

A.

I am aware that Standard & Poor's has downgraded the credit rating of Japanese government bonds. However, as credit ratings represent opinions expressed by individual rating agencies based on their expert knowledge, I would like to refrain from commenting on the specifics of individual ratings.

In any case, we will carefully watch the market trend and the impact that it may have on financial institutions. Generally speaking, Japan holds a very large amount of net external assets by international standards-this amount was 266 trillion yen in 2009, making Japan the largest holder of external assets in the world. Japan also holds 1,400 trillion yen in household financial assets. Those assets increased by tens of trillions of yen last year, if I remember correctly. In addition, Japan has a stable financial system and many industries that have very high technological capability. You know, I would presume, that there are many triple-A companies, or international companies with very high technological capability.

Moreover, 95% of Japanese government bonds are purchased by domestic investors, as is often mentioned, and the Japanese financial market has maintained stability. Today, I hear, the Nikkei average futures in Chicago rose 20 yen compared with the closing price on the Osaka Securities Exchange. In addition, Japan purchased more than 20% of the euro bonds issued in response to the Irish crisis and as a result, the price of the euro bonds rose sharply, as I told Ms. Lagarde (Minister of Economic Affairs, Finance and Industry, France) when I visited Paris. Although Japan faces various problems, it accounts for a large share of the global GDP. Therefore, we should not make an excessive response to the downgrading. I will keep a close watch on future developments patiently.

Thank you for your kind attention.

(End)