Press Conference by Shozaburo Jimi, Minister for Financial Services

(Excerpt)

(Tuesday, February 14, 2012, from 10:45 a.m. to 11:09 a.m.)

[Opening Remarks by Minister Jimi]

Today, I do not have anything to announce.

[Questions & Answers]

Q.

I would like to ask you three questions.

First, regarding the European sovereign debt crisis, it was reported last week that additional austerity measures had been determined in Greece. In the meantime, Moody's downgraded the government bonds of Italy and Spain yesterday. In light of these problems, how do you expect the European debt crisis will play out? Also, what impact do you expect on Japanese financial institutions?

A.

As has been reported, a fiscal austerity bill was passed by the parliament in Greece yesterday, February 13, marking a step toward the implementation of additional aid by the EU and the IMF. Further efforts will be made by Greece to obtain approval for the additional aid at a meeting of the finance ministers of the 17 euro-zone countries scheduled for Wednesday, February 15.

In any case, there were three conditions for approval of the additional aid, if I remember correctly. One is parliamentary approval of the fiscal austerity plan, the second is the identification of concrete measures for spending cuts totaling 325 million euros, and the third is a promise in writing by the Greek ruling party's leader to implement the austerity plan, as I understand it. One of the three conditions, parliamentary approval of the fiscal austerity plan, was obtained yesterday.

In any case, while the first of the three conditions was satisfied regarding the European debt problem as I mentioned now, I believe that it is important to ensure that the measures agreed upon are implemented one by one, and Japan needs to carefully monitor future developments.

As for the question about the impact on Japan's financial system, while the system as a whole is sound and stable, we will continue to carefully monitor domestic and overseas economic and market developments, as well as the possible impact on Japan's financial system with a sense of alertness.

Q.

Let me move on to the second question. On Friday, February 10, Tokyo District Court ruled in favor of the government in a lawsuit concerning the gray zone interest rates. What is your view on this ruling?

A.

Regarding the lawsuit you mentioned, I am aware that the court ruled in favor of the government on February 10. I understand that the court ruling upheld the government's argument. I would like to refrain from commenting on the details of the ruling as that concerns a judicial judgment.

Q.

Now, my last question. Regarding the Tokyo Stock Exchange's system glitch that occurred on February 2, I presume that the TSE is conducting an investigation based on the order for the submission of a report. Could you tell me about the progress so far made in the investigation and administrative actions that may be taken by the Financial Services Agency (FSA) in the future?

A.

The FSA recognizes problems, such as the risk that the fact that investors were prevented from conducting stock transactions in some issues - 241 issues in total - could affect the credibility of the Japanese market and Japan's international competitiveness in the exchange business.

On that day, I held a door-step interview. It is important that the TSE examine the causes and draw up measures to prevent the recurrence of the system glitch.

On Thursday, February 2, the FSA Commissioner summoned TSE President Saito and issued an order, based on Article 151 of the Financial Instruments and Exchange Act (FIEA), to submit a report after examining the cause and drawing up measures to prevent a recurrence of the system glitch.

In any case, while I would like to refrain from commenting on specific administrative actions, I believe that it is important to monitor the situation with a sense of alertness as the exchange is a very important market and its system is critical to the entire financial sector. On February 2, the FSA ordered the TSE, based on Article 151 of the FIEA, to submit a report after examining the cause of the system glitch and drawing up measures to prevent a recurrence, and as I said at my previous press conference, I believe that it is important that the TSE itself conduct a full investigation. If a problem is found as a result, the FSA will consider taking strict action as needed.

(End)