Press Conference by Tadahiro Matsushita, Minister for Financial Services

(Excerpt)

(Friday, June 15, 2012, from 8:32 a.m. to 8:42 a.m.)

[Opening Remarks by Minister Matsushita]

I attended the cabinet meeting.

At the cabinet meeting, relevant ministers reported on white papers concerning elderly people, tourism, land and other matters, as well as on activities related to the abduction of Japanese nationals by North Korea. It was also reported that Japan will supply power generators to Myanmar, where the electricity supply situation is very severe.

Many other matters were reported today.

That is all I have to say.

[Questions & Answers]

Q.

Let me ask two questions.

The other day, the Liberal Democratic Party (LDP) presented a proposal for the prevention of a recurrence of the problem of AIJ Investment Advisors. Regarding affairs related to the Financial Services Agency (FSA), the LDP hopes to strengthen punishment in particular based on a bill sponsored by lawmakers. What are your thoughts on that?

A.

I am aware of media reports concerning what you mentioned.

After examining the LDP's proposal, the FSA will quickly consider effective measures to prevent a recurrence while taking care not to prevent sound investment activity in light of financial practices.

I am aware of the proposal for the strengthening of punishment. I recognize that the strengthening of punishment is an important issue for deliberation when we consider how to prevent a recurrence of problems like this from the perspective of enhancing checks against illegal practices by companies managing customers' assets based on discretionary investment contracts.

In any case, the FSA will quickly consider effective measures to prevent the recurrence of problems like this, including what punishment should be imposed.

Q.

My second question concerns the integrated reform of the tax and social security systems. Negotiations over the modification of the bill for the integrated reform are close to a conclusion while there are complaints that the social security reform will be partially shelved. How do you feel about the negotiations?

A.

I understand that working-level officials of the three parties are holding a discussion. I am keeping a close watch on the discussion. As serious discussion is continuing on the modification of the bill, I would like to refrain from making comments. I am keeping a close watch.

Q.

Ahead of the Greek election scheduled for the day after tomorrow, the credit rating of Spanish government bonds was downgraded by three notches and the yield on the bonds rose above the critical line of 7%. How do you view this market instability?

Also, are there any measures that may be taken amid concern that the market could be thrown into great confusion depending on the results of the Greek election?

A.

Regarding Spain, on Saturday, June 9, euro zone finance ministers issued a statement. According to the statement, the finance ministers welcomed Spain's decision to request financial assistance from euro zone countries and expressed their readiness to provide financial assistance worth up to 100 billion euro, equivalent to approximately 10 trillion yen, which will be used for recapitalization of Spanish financial institutions.

I am aware that after the announcement of this assistance, the market yield on Spanish government bonds continued to rise and hit the highest level since the launch of the euro. I also know that credit rating agency Moody's downgraded the rating of Spanish government bonds by three notches, from A minus to triple B minus, on June 13, or in the early morning of June 14 Japan time.

I believe that restoring the Spanish financial sector to a sound condition is an important step toward stabilizing the market. In any case, the FSA will closely monitor European countries' policies toward the European fiscal and financial problems and their impact on the market with strong interest.

I hope that Europe's self-help efforts will resolve the European problems so that economic and financial stability can be achieved and trust in the market can be ensured.

As for my view on market developments, the Greek re-election will be held soon. The view is prevalent that against the backdrop of concerns over the Spanish fiscal and financial problems, there are moves to avert risks in the market, as shown by stock price declines, the euro's drop and a rise in the yields on government bonds issued by peripheral European countries.

I will refrain from commenting on specific market developments. As the minister for financial services, I will closely monitor market developments with strong interest while maintaining cooperation with relevant cabinet ministers and the Bank of Japan.

Q.

In relation to the problem of AIJ Investment Advisors, which was mentioned in an earlier question, I understand that the FSA is continuing a second-round investigation. Former Minister Jimi was reluctant to disclose the results of the investigation due to concerns over harmful rumors. Now that the LDP and the Democratic Party of Japan have worked out measures to prevent a recurrence, what is your stance on the disclosure of the results of the second-round survey?

A.

I have not made a decision. I would like to see for a while longer how the investigation will proceed.

Q.

A fairly long time has passed since the second-round investigation started. Could you give us some idea of when it will be completed?

A.

As the investigation is ongoing, I would like you to wait a while longer. As for whether to disclose the results, I am still considering that.

Q.

I understand that major countries' central banks are said to be preparing coordinated actions to provide liquidity in case confusion should arise after the Greek election. Could you tell me about your opinion and facts concerning that?

A.

The FSA will closely monitor European countries' policies toward the European fiscal and financial problems, and their impact on the market with strong interest. I strongly hope that Europe's self-help efforts will resolve the European problems and that Europe will appropriately take every conceivable measure.

(End)

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