Press Conference by Taro Aso, Deputy Prime Minister, Minister of Finance, and Minister of State for Financial Services
(Monday, August 15, 2016, 10:37 am to 10:45 am)
[Questions and answers:]
I would like to ask you two questions about a front page story in the Nikkei on Saturday, August 13th. In this article, the Nikkei reported that the Financial Services Agency had asked the three mega-banking groups about the impact on them from the Bank of Japan’s negative interest rate policy. It said this led the FSA to estimate it may be a factor reducing bank earnings by at least about 300 billion yen in the fiscal year ending March 2017, and it further indicated that the FSA conveyed its concern to the BOJ that if banks’ earnings continue to deteriorate, it may lower their lending capacity. So my first question is, is this report true?
I basically don’t comment on individual newspaper reports. But let me just give you a general comment. There are a lot of reports about how negative interest rates may affect the earnings of financial institutions. While there is no doubt it leads to lowering interest revenues on loans and reducing the scope of investment methods, it’s also true that it lowers funding costs. From what you told me, it would seem the story doesn’t mention such aspects as valuation gains accrued on government-bond holdings. But this issue needs looking at from both positive and negative sides. In any case, the FSA will continue monitoring the financial institutions, and the government and the Bank of Japan will work hand-in-hand to combat deflation to keep implementing measures to support economic growth.
You said the article was written about just one side of the coin, but I get the impression that, if this one side proves to be true, the FSA might be veering off the direction it should be going at a time when the government and the BOJ must work hand in hand. What would you say about this?
That is nothing more than your impression.
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