Regarding the Reform of the Japanese Financial System

- Contributing to the Vitalization of the National Economy -

June 13, 1997

The Financial System Research Council

In Japan, through the growth, and subsequent collapse, of the so called economic bubble, it has become necessary to completely review the economic and social system. This is an urgent task shared by all Japanese.

In order to maintain the vitality of the Japanese economy, in the context of society's rapid aging in the twenty-first century, it is necessary to structurally reform the economic and social system. The financial system, as the basis for the economy, must also be reformed into one that is superior and able to support the Japanese economy.

The Financial System Research Council established the Committee for the Advancement of the Financial System and Services to inquire into the various functions that financial services are expected to perform in the twenty-first century. Since its first plenary meeting held on August 28, 1996, it has carried out a wide ranging inquiry. In the middle of this, in November 1996, Prime Minister Hashimoto directed that the financial system be reformed. The Committee immediately took up this direction and earnestly held deliberations, one after the other, on a reform plan that will be completed by the year 2001.

Here, the results of this Committee's deliberations are delivered in the form of the report, "Regarding the Reform of the Japanese Financial System - Contributing to the Vitalization of the National Economy" and approved by this Council. As there are specific and necessary measures in this report by which the financial system reform can be advanced, its Council hereby submits it as the report of the FSRC.

From here, we strongly expect that the Government will steadily advance reform of the financial system and take necessary measures based on this report.

It is very deplorable that scandals involving financial institutions have occurred often. It is necessary for financial institutions to restore trust as soon as possible, by ensuring that corporate ethical standards are pervasively employed. It is natural to require a high degree of self discipline together with liberalization. Thus, it is necessary for financial institutions themselves to diligently work to reform their management in order to achieve the financial system reform. As financial institutions are indispensable players in this reform to vitalize the national economy, we strongly hope that financial institutions will consider their business operations and conduct, taking their users' opinions into account, and manage their businesses, with the awareness of its public nature, to find their place in the financial system of the 21st. century.


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