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

(Excerpt)

(Friday, February 27, 2015, 8:35 am to 8:44 am)

[Questions and answers]

Q.

I would like to ask you about the advisability of the money deposited in so-called “dormant” accounts being used for social purposes. At present, a nonpartisan group of lawmakers is working on a bill to use such money, estimated to total 50 billion yen every year, to provide medical support to elderly people. Concerning this proposal, Minister Aso said at a press conference in January last year that dormant accounts should be used in a manner that would be acceptable to the general public. By saying that the matter cannot be quickly solved by the Financial Services Agency (FSA), you have shown caution toward the proposal. I would like to ask you about this issue by referring to the existing scheme aimed at helping victims of bank transfer scams. The law enacted in 2007 to support such victims allows the Nippon Foundation to use the money illegally collected by scam groups, which is to be recovered and deposited with the Deposit Insurance Corporation of Japan, to help the victims recover the money they have lost. Similar to this scheme, the proposal being floated by the parliamentary group calls for dormant money to be deposited with the Deposit Insurance Corporation of Japan. The nonpartisan group has proposed creating a new organization under the Cabinet Office to manage the use of the money. Do you think this proposal is acceptable to the general public? Some believe that the dormant money should be deposited in state coffers for use by the state. The Finance Ministry has not clarified its position on the use of money in dormant accounts. In view of the need to reduce the government’s debt, does the Finance Ministry intend to use such money by transferring it to the state?

A.

How much dormant money is there? I seem to remember that the amount generated yearly exceeds 50 billion yen.

Q.

The amount of dormant money generated annually is estimated to be around 50 billion yen.

A.

There have been various opinions on what to do with the dormant money. I know that the advisability of permitting the money to be used under a lawmakers-initiated bill has been discussed, but nothing specific has been decided yet.

Q.

According to some sources, the FSA conducted stress tests on regional banks earlier this year under three scenarios – an increase of 100 basis points in interest rates, a 40% decline in stock prices and a 1% loss in lending. The results showed that regional banks would be most severely affected by a 100 basis point rise in interest rates. Meanwhile, a survey on 40 regional banks deemed relatively sensitive to an interest rate rise found that 90% of them have yet to establish a response system against a possible interest rate hike. Minister Aso, what is your view on these results?

A.

The finding that an interest rate rise is the most dangerous factor among the three scenarios is understandable. But it’s like crying wolf that the Finance Ministry has issued warnings about a possible rise in interest rates over the decades. Each time the Ministry has done so, rates have declined. No one in the world forecasted that Japan’s interest rate would fall to 0.3% or 0.4%. If the rate stays at that level for a long time, we may need to brace ourselves for a reversal of the trend. We may need such a mindset. However, it is not true that the FSA is giving concrete guidance to regional banks always based on a hypothetical situation. Your comment is probably correct. However, the FSA has not decided a specific policy to be invoked in the event of an interest rate rise.