Press Conference by Shozaburo Jimi, Minister for Financial Services

(Excerpt)

(Friday, June 17, 2011, from 9:32 a.m. to 9:45 a.m.)

[Questions and Answers]

Q.

Regarding important tasks that should be accomplished by the Kan government, which of the important bills, such as a second supplementary budget, do you think that the Kan government should stay on to enact?

A.

I believe that it is very important to respect principles. As a once-in-a-millennium earthquake accompanied by a tsunami and a nuclear power station accident has occurred, we are facing a crisis, as I have repeatedly stated in the Diet. Therefore, the greatest political task is to do everything possible in disaster relief and achieve post-disaster restoration and reconstruction.

This is a matter that should be tackled by supra-partisan efforts in the Diet. How we tackle this crisis is so important that what the Diet is for may be questioned by the people. As I have frequently mentioned, the preamble of the Constitution of Japan states that the Japanese people act through duly elected representatives in the Diet. There should be no distinction between the House of Representatives and the House of Councillors, or between the ruling and opposition parties in the Diet. In times like this, we must first and foremost devote ourselves wholeheartedly to restoration and reconstruction based on the very basic principle of what lawmakers are for, as there are still missing people.

Q.

Could you tell me what was discussed at the meeting of relevant cabinet ministers on the double loan problem this morning?

Also, as tomorrow marks one year since the amended Money Lending Act was put fully into force, what do you think of the initial purpose of this act, which is to reduce the number people struggling with multiple debts?

A.

The meeting of relevant cabinet ministers on the double loan problem was held this morning. The double loan problem has repeatedly been taken up in the Diet, as you know. This is not a matter that can be dealt with by the Financial Services Agency (FSA) alone. Basically, the FSA has jurisdiction over private financial institutions. And, basically, the financial source of loans provided by private financial institutions is deposits entrusted by individuals. Repaying deposits with interest is an appropriate role of private financial institutions. In that sense, there are limits to what can be done in times of disasters like this, as I have said over and over again.

However, deliberation on the bill to amend the Act on Special Measures for Strengthening Financial Functions was concluded in the House of Councillors yesterday, as you know. The FSA staff devoted themselves to this bill, working almost all night even during the holiday season. As that is a difficult law, the FSA staff consulted with a director at the Cabinet Legislation Bureau during the holiday season. It is a valuable law that concerns the difficult issue of how to strengthen the financial functions in a comprehensive manner outside the existing framework of finance after the once-in-a-millennium tsunami and how to reassure depositors.

Yesterday, I received words of praise from Ms. Kyoko Nakayama, a Diet member who used to work for the Ministry of Finance, so I am grateful for the hard work of the FSA staff while admiring her for paying attention to our efforts.

Regarding the double loan problem, if capital is increased and the financial functions are strengthened, the forgiving of loans in the case of loans either to small and medium-size enterprises or individuals may be added to the range of available options depending on the circumstances. In that sense, this helps to deal with the double loan problem. Today, the Act on Special Measures for Strengthening Financial Functions was discussed again. From the standpoint of the FSA, this is an important matter. Even so, governmental financial institutions and policy-based finance schemes should play the leading role in times like this. These are not under the jurisdiction of the FSA, as you know. In this respect, ministries that have been powerful since a long time ago, such as the Ministry of Agriculture, Forestry and Fisheries, the Ministry of Land, Infrastructure, Transport and Tourism, and the Ministry of Economy, Trade and Industry, are acting appropriately. Governmental financial institutions and policy-based finance schemes can be supported by the taxpayer's money in the form of interest subsidies, so they can provide no-interest loans or loans with a five-year grace period of principal repayment, for example. Policy-based finance schemes and public financial institutions are notable in that they are convenient and useful for relief activities because of the broad range of policy objectives. At the same time, interest rate reduction requires budget funds, which means fiscal expenditure by the Ministry of Finance. As this is a broad issue that must be dealt with by the government as a whole, the Prime Minister recently instructed the Ministry of Finance, the FSA, the Ministry of Economy, Trade and Industry, the Ministry of Land, Infrastructure, Transport and Tourism, and the Ministry of Agriculture, Forestry and Fisheries to appropriately cooperate with each other under the leadership of the Cabinet Secretariat.

As a matter of fact, the FSA has done much of the spadework, although you may not have noticed it. As other ministries have major policy tasks of their own, we have done the spadework. I am grateful to the FSA Commissioner and his staff and proud of their achievements.

As to the question concerning the Money Lending Act, we have established a follow-up team, as you know. This act was fully put into force soon after I took office as the Minister for Financial Services. After that, the multiple debt problem has persisted and the consumer loan market has continued to exist. The consumer loan market may have been overly expanded, to be sure. However, as the market is there, we will carefully monitor the situation through the follow-up team. France's postal service provider, called La Poste, has started a consumer loan service. I heard about this when I visited France in January and met with the president of La Poste, which is wholly owned by the state. In Japan, there are also needs for consumer loans. We have introduced appropriate regulation on the consumer loan business, which tended to become an object of public criticism, through the Money Lending Act. However, as the needs are there, we must take that into consideration. Rather, I hope that banks, Shinkin banks, credit cooperatives and relevant municipalities will involve themselves in efforts to deal with the multiple debt problem. As the Minister for Financial Services, I will encourage them to do so.

(End)