Press Conference by Shozaburo Jimi, Minister for Financial Services

(Excerpt)

(Friday, April 15, 2011, from 9:16 a.m. to 9:35 a.m.)

[Opening Remarks by Minister Jimi]

I do not have anything particular to report to you.

[Questions & Answers]

Q.

I have several questions.

First, on the appointment of the next chairman of the Japanese Bankers Association, yesterday, President Nishibori of Mizuho Bank declined to assume this post, citing the system problem, and President Nagai of Mitsubishi-Tokyo UFJ Bank is set to take the post. As the Minister for Financial Services, how do you view this extraordinary situation?

A.

I know that yesterday, on April 14, the Japanese Bankers Association announced an informal decision to appoint President Katsunori Nagai of Mitsubishi-Tokyo UFJ Bank as it next chairman. However, as this is a matter of personnel appointment at the association, the Financial Services Agency (FSA) will refrain from making comments.

Q.

The FSA is inspecting Mizuho Bank. Could you tell me what approach the FSA is taking in the inspection and what points it wants to check?

A.

As you know, the FSA is conducting an on-site inspection of Mizuho Bank and it has required the submission of a report on the facts and cause of the recent system problem based on the Banking Act.

As the FSA needs to examine the content of the report to be submitted by the bank and the results of the ongoing inspection, I would like to refrain from making comments with prejudgment.

Q.

Lastly, as the G20 meeting started, could you tell me what issues you are paying attention to and what results you are hoping for?

A.

I hear that the global economy and financial regulatory reform are on the agenda at the meeting of the G20 Finance Ministers and Central Bank Governors being held for two days from yesterday, on April 14 and 15.

Specifically, I understand that the implementation of measures agreed upon before the Seoul summit last November and the progress in the work on additional issues for consideration are expected to be discussed, as I previously mentioned. For example, the issue of SIFIs, or systemically important financial institutions, about which many questions have been asked, is still under discussion. There are various issues like this on which agreement could not be reached before the Seoul summit, so I understand that the Finance Ministers and Central Bank Governors are making efforts to fix details in preparation for the Cannes summit scheduled for November this year.

As I have said over and over again, Japan believes that it is very important to ensure that international financial regulatory reform is a well-balanced one that not only contributes to the improvement of the medium- and long-term soundness of the financial system but also takes into consideration the different circumstances of the financial systems of individual countries, and it is also very important to give due consideration to the impact on the real economy.

I was a cabinet minister when Hokkaido Takushoku Bank and Yamaichi Securities failed at the time of the Asian financial crisis of 1998, so as a politician, I had bitter, painful experiences of the financial crisis. With that in mind, I have argued that due consideration should be given to the impact on the real economy in my meetings with officials around the world, including when I visited the United States and China in August and when I met with Ms. Lagarde of France (Minister of Economic Affairs, Finance and Industry of France) in January this year.

Q.

Do you think that the need to take into consideration the circumstances of individual countries has increased because of the earthquake?

A.

Your question is what will be discussed about the earthquake at the meeting of the G20 Finance Ministers and Central Bank Governors, is that correct? As you know, an earthquake of an unprecedented scale occurred on March 11, followed by the tsunami and the nuclear power station accident. We kept the market open the following week, and the Nikkei Average dropped by 633 yen on the first day of the week and by 1,050 yen on the second day, prompting some politicians to call for the closure of the market, as I told you earlier. There was also an argument that futures trading should be restricted. However, in my belief that it is necessary to keep the Japanese market open all the more in times like this, I have kept it open.

To be sure, stock prices showed wild swings and the yen appreciated, with the dollar falling to 76 yen in foreign exchange trading. However, on March 18, the (G7) Finance Ministers and Central Bank Governors held a telephone conference with Ms. Lagarde, France's Minister of Economic Affairs, Finance and Industry acting as the chairman, and decided on coordinated market intervention. Since before that, there had been a consensus at summit meetings that rapid exchange rate movements are not favorable for the global economy. I have been told that Finance Minister Noda will express gratitude for the special consideration that was given to Japan in the implementation of the coordinated intervention and will explain the impact of the earthquake on the Japanese economy and Japan's efforts toward restoration and reconstruction over the past month, including the compilation of a supplementary budget, so I understand that discussions will be conducted based on the explanations provided by the Finance Minister.

As I mentioned earlier, when I met with Ms. Lagarde in Paris in January - at that time, Europe faced the Greek shock and the Irish crisis - she thanked Japan for its quick announcement of a plan to purchase 20% of the euro-denominated bonds that would be issued to cover the cost of financial bailout. I feel that in the world of globalized economy, countries are dependent on each other.

The historical and economic backgrounds vary from country to country. However, the world is interconnected instantaneously in the field of finance, coordinated intervention, and coordinated policy implementation in the broad sense, and the G20 partnerships are very important.

As I mentioned over and over again, countries in 1929 formed economic blocs and concentrated on pursuing the interests of their own blocs. That is how the global economy was divided into economic blocs, as you know well. Very unfortunately, that was presumably one of the causes of World War II. I believe that human beings have learned from that mistake. It is true that different countries have different historical backgrounds and different financial systems. Nevertheless, based on the lessons of the Great Depression of 1929 and World War II, human beings have avoided that path this time, and as a politician, I highly appreciate that fact.

Q.

I am Jinryo from Magazine X.

Let me ask you about a minor issue. Around 400,000 to 500,000 cars damaged by the disaster will be scrapped. The government has expressed willingness to support individuals and small business owners. The scrapping of the 500,000 cars itself is a problem, but the people in the Tohoku region cannot live without cars. Even though they want to buy replacement cars, they have no money.

The National Police Agency has proposed to simplify the garage certification procedure, for example, while the Ministry of Land, Infrastructure, Transport and Tourism has offered to extend the effective period of car inspection certification and speed up the procedure for new car inspection. As for matters related to the FSA, support is provided for replacement purchase with regard to compulsory automobile liability insurance for 37 months. What will be done in the 38th month and later? I think there are some support measures that the FSA may provide for the purchase of replacement cars. Although the government is working hard on issues related to households and business management, attention has not been paid to the loss of 500,000 cars. This may seem to be a minor issue but I believe that it is important.

A.

I see. This is a very timely suggestion, although I have not heard about that issue from the FSA staff. I used to represent the Fukuoka 4th District, which comprised four cities and 19 towns and villages, including three municipalities designated as under-populated areas. In those areas, most public transport systems have been abolished as a result of losses. Even the remaining systems, which are operated by public organizations subsidized by municipal governments, run only three or four bus services per day. When elderly people visit hospital - I am a doctor by profession - few means of transport are available to them. While younger people own a car, elderly people without a car face great difficulty. The car ownership ratio is highest in Toyama Prefecture, if I remember correctly.

In Tokyo, subways meet the needs in most cases. In my former electoral district in Kyushu, in under-populated areas, there are two or three vehicles per family, although many are light trucks. The cabinet is now working on issue like that under the leadership of Mr. Sengoku, and I believe that the FSA staff are making appropriate efforts concerning the matter you mentioned. Since life without a car is difficult in that region, we will take appropriate measures with that in mind. This is a once-in-a-millennium disaster, so the most important thing for the government to do is to take the standpoint of disaster victims.

Q.

I understand that you will visit the disaster area tomorrow and exchange views with financial institutions. What issues will you focus on in the exchange of views?

A.

I will visit the disaster area tomorrow. First of all, I will carefully listen to officials at various financial institutions and small and medium-size enterprises as well as at post offices. The main purpose of my inspection of the disaster area is to carefully listen first-hand to the opinions of the people struggling in the disaster area. In a situation like this, the important thing is, first and foremost, to listen to the requests of the affected people. While I will of course offer my condolences and sympathy, it is important for politicians to carefully listen to what people have to say in a situation like this.

(End)