Press Conference by Taro Aso, Deputy Prime Minister, Minister of Finance, and Minister of State for Financial Services

(Excerpt)

(Friday, September 27, 2013, from 11:08 am to 11:26 am)

[Questions and answers]

Q.

The procedures for opening Nippon Individual Savings Accounts (NISA) are set to start from October 1, and industry group forecasts for the end of this month put the number of accounts at 3.22 million.  What is your perspective on this number, and how do you think this system will tie into the shift from savings to investment?

A.

Initially, the number of investment trust companies predicting anything like 3.22 million accounts was zero.  The fact is that we are now looking at a figure of 3.22 million accounts but, with regard to savings at least, the prevailing view among Japanese is that stocks are dangerous and dubious, an image that has yet to be dispelled.  This stems from the fact that the stock price index reached a peak of 38,915 yen at the end of December 1989, since when it has fallen to about 14,700 yen, a drop of more than 24,000 yen.  That being the case, a feeling of insecurity from stocks fluctuating up and down is one that has become deeply rooted in the minds of many.  This has been true for a long time, and is not something that just started now.  Looking at the allocation of the almost 1,600 trillion yen in personal financial assets held by Japanese citizens to stocks and to cash and savings, cash and savings account for nearly 900 trillion yen, and I believe this level of cash and savings is exceedingly high in a global context.  Continuation of the current low interest rates will steer funds from savings into investment in stocks and such, and the newspapers were completely off the mark in declaring that the interest rate would rise if the government were to issue huge sums of government bonds; the rate has dropped to 0.6%. It had been 0.8% at the time, and the papers had asserted that the rate would steadily climb. Today it is about 0.68% and thus it has dropped, so deposits and savings will not be similarly climbing, no matter how much one saves. General prices have been gradually easing downward with deflation, and a 1% decline in prices means a 1% increase in the value of savings.  Supposing that we are able to boost prices by 2%, however, a proportional decline would occur in the value of savings, and this would change minds on making the move “from savings to investment.”  I do not think it strange at all that people who feel a need for a change of mindset have taken a growing interest in NISA, and I honestly see this as a positive development.

(End)