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

(Excerpt)

(Tuesday, April 21, 2015, 9:40 am to 9:47am)

[Questions and answers]

Q.

I would like to ask whether the assessment of Abenomics would be affected by the failure of a large company whose financial condition is currently a cause for serious concern. The Abe government has been endeavoring to strengthen the earning capabilities of companies and translate this into a broad-based virtuous economic cycle. Nevertheless, some large companies may suffer serious financial difficulty. In the event of a restructure of such companies, if the restructuring can take place under the flexible application of some of the regulations for banks that are under the jurisdiction of the Financial Services Agency (FSA), I would like to ask about whether the application of such regulations would be relaxed. Specifically, there is rule that private-sector financial institutions cannot hold more than 5% of the stock in non-financial companies, so supposing a debt-for-equity swap, through which debt securities would be exchanged for shares, were proposed as a means of restructuring a large company, this would result in banks appearing to hold more shares. So if a large company were to fail, and this would affect the assessment of Abenomics, but the looser application of regulations would allow the company’s failure to be avoided, would that be approved? If you have made such a decision recently, please tell us about it.

A.

Japan is a country that promotes free competition in its economy, so it’s perfectly feasible that a large company could fail, and I don’t think that such an event would immediately indicate the failure of Abenomics. In countries that allow free competition in their economies, some companies make money and some companies lose money – and some fail. That’s the way I see it. I for one wouldn’t really view such an event as constituting the failure of Abenomics.