Press Conference by Shozaburo Jimi, Minister for Financial Services

(Excerpt)

(Friday, July 22, 2011, from 8:36 a.m. to 8:50 a.m.)

[Questions & Answers]

Q.

The other day, the public comment period concerning the Act on Special Measures for Strengthening Financial Functions expired. Could you tell me when this act is likely to be put into force and how you think it should be utilized?

A.

Regarding the act to amend the Act on Special Measures for Strengthening Financial Functions in order to deal with the impact of the Great East Japan Earthquake, the cabinet orders and Cabinet Office ordinances that prescribe specifics were subjected to the public comment procedure from July 11 to July 15. We are now working to finalize the details of the cabinet orders and Cabinet Office ordinances. At this time, we cannot say anything definite about the schedule, including when the amended act will be put into force. However, we will quickly proceed with the work so as to ensure that it will be put into force as soon as possible in order to maintain and strengthen financial functions in the disaster areas. As I have mentioned repeatedly, after the earthquake, the FSA staff worked even during the holiday season and a director at the Cabinet Legislation Bureau also came to the office, so this act was written in time for June 22 (original expiry date of the current Diet session). This is a once-in-a-millennium disaster, and in times of emergency, emergency political actions must be taken, as I have been saying. This act has been written in order to strengthen financial functions and protect depositors in the earthquake-stricken areas. Regarding Shinkin banks and credit cooperatives, their central organizations will carry out business restructuring in 10 years' time, including capital measures. When restructuring cannot be carried out successfully in any way, Deposit Insurance Corporation may provide funds on a case-by-case basis. It is very unusual that a law like this will be created from the beginning. This is a very extraordinary financial law, and we may call it a special law intended to save the Tohoku region, so the government and the FSA will do everything possible to support the region.

Q.

This morning, there was a media report that Asian business offices of major banks and securities companies will be inspected simultaneously. What do you think of that?

A.

Regarding that media report, I hear that it is not true that Asian business offices of the three megabanks will be inspected simultaneously.

As to the broad direction of inspections, the basic inspection policy for fiscal 2010 incorporated such measures as cooperating with the foreign authorities, including the authorities in Asian countries, and dispatching inspectors when necessary. One bitter lesson of the Lehman shock is that U.S. financial regulatory organizations could not necessarily keep up with the development of various financial products by banks, and that made the damage even more severe. To my mind, basically, the debate on the Basel regulation goes like this based on reflection on that lesson.

Q.

What is your assessment of the aid package for Greece?

A.

I understand that at a summit meeting of the euro zone countries on July 21, the Greek problem was discussed and an agreement was reached on the second public aid package for Greece that is worth some 109 billion euros and the expansion of the European Financial Stability Facility to enable the purchase of government bonds in the secondary market.

We expect that as an effort to resolve the European debt problem, this agreement will help to stabilize the market. I understand that efforts to achieve financial stability will be continued by relevant authorities including the governments of the countries adopting the euro, and the FSA will continue to carefully monitor the situation.

Thank you very much.

(End)