December 21, 2007
Financial Services Agency

FSA publishes the Plan for Strengthening the Competitiveness of Japan's Financial and Capital Markets

The Financial Services Agency (FSA) has published the Plan for Strengthening the Competitiveness of Japan's Financial and Capital Markets (the Plan).

In order to sustain the growth of Japan's economy as the population is aging, strengthening the competitiveness of the country's financial and capital markets has become a pressing policy issue. Attractive financial and capital markets are expected to provide good investment opportunities to the financial assets held by Japan's household sector that amount to more than 1,500 trillion yen (about 14 trillion US dollars), and to supply domestic and foreign companies with adequate amount of capital for growth. It is also expected that, with such markets, Japan's financial services industry will be able to generate high value added, thereby contributing to sustainable economic growth.

Against this background, Economic and Fiscal Reform 2007 (''Basic Policies''; cabinet decision on June 19, 2007) instructed that the FSA put together a plan for strengthening the competitiveness of Japan's financial and capital markets by the end of this year, and that the plan be implemented by the entire government. Following this instruction, the FSA has conducted an extensive examination of the challenges the country faces in strengthening the competitiveness of its markets and has put together this Plan.

The Plan incorporates specific measures to strengthen the competitiveness in the following four policy areas:

1. Creation of vibrant markets investors can have confidence in. A market infrastructure needs to be put in place that enhances diversity in financial services and raises customer benefits, while ensuring market fairness and transparency. The measures to be taken to achieve this objective include introducing a bill to the Diet (Japan's parliament) that will enable diversification of exchange-traded investment funds and establishment of markets in which professionals are engaged in vigorous transactions.
2. Business environment that vitalises the financial services industry and promotes competition. The FSA intends to put in place a competitive environment that can meet the needs of the times, which enables provision of diverse and high-quality services. Various measures will be taken to this end, including introduction of a bill to the Diet that will revamp the firewall regulation among banking, securities, and insurance groups, as well as broaden the scope of businesses permitted to banking and insurance groups.
3. Improving the regulatory environment (better regulation). The FSA aims to enhance the effectiveness, efficiency, and transparency of financial regulation by improving its supervisory method. This will include intensive dialogue with the industry with a view to sharing the principles for financial regulation, as well as close monitoring of market developments and effective supervisory response.
4. Improving the broader environment surrounding the markets. The measures include developing internationally competitive human resources specializing in finance, law, accounting, etc., and improving the urban infrastructure suitable for an international financial center.

The FSA is determined to implement the measures incorporated in the Plan in a timely manner, with a view to establishing attractive, high-quality financial and capital markets to which capital, information, and human resources flow in from within and outside Japan.

• Outline of the Plan for Strengthening the Competitiveness of Japan's Financial and Capital Markets (PDF:167KB)
• Plan for Strengthening the Competitiveness of Japan's Financial and Capital Markets (PDF:144KB)