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The statement by Mr. Hakuo Yanagisawa, Minister for Financial Services in the Financial Committee of the House of Councillors
I, Hakuo Yanagisawa, Minister for Financial Services, would like to comment on the current financial administration, having been given this opportunity to make a statement today.
First of all, we are furious at the terrorist attacks taking place in the U.S. on September 11, which we regard as nothing but atrocious acts. The Financial Services Agency (FSA) is making at most efforts including having requested the financial institutions to report the transactions that are suspected of their connections with the Taliban and the other listed individuals and entities.
With respect to recent financial trends, there are concerns about the impact of the terrorist attacks against the U.S. on the world economy. There are debates on how Japanese financial institutions might be affected through stock prices and business prospects.
Under these circumstances, the Japanese government issued the Advanced Reform Program (interim report)'' with the Reform Schedule on September 21, with the aim of carrying out structural reform in a firm and swift manner. The FSA intends to engage actively in the structural reform of the securities market and the financial system as referred in the Program.
(Efforts made toward the Disposal of Non-performing Loans)
Firstly, our efforts made toward the disposal of non-performing loans (NPLs) by banks, executing immediately the following new measures aimed at reinforcing the disposal of NPs and stimulating the financial sector. By promoting structural reforms in other sectors simultaneously, we intend to solve the NPL problem at the latest in three year time period of intensive adjustment.
In order to ensure smooth financial flows, private financial institutions, etc. are required to make every effort to smoothen supply of necessary funds all the more, to their sound counter parties including small and middle-sized enterprises including the treatment of the special guarantee at the time of redemption.
In order to ensure the soundness of banks, we will drastically reinforce regular inspections of major banks, and in addition to that, we will conduct special inspections mainly focusing on debtors, including those whose market assessments are significally changing. Moreover, we have urged major banks to secure adequate provisions taking into account the market signals in a timely manner.
For the purchasing of NPLs by the Resolution and Collection Corporation, relevant legislations are currently being discussed by the ruling parties in order to make the pricing more flexible and to purchase intensively by the end of 2003. The Corporation will also be actively involved in corporate rehabilitation, for which we are promoting the establishment of funds.
Last but not the least, we have requested the major banks to help revitalize those companies to the greatest extent if they have any potential to revive, while removing those loans classified as ''in danger of bankruptcy'' and below from their balance sheets.
(Banks' Shareholding Limitations, etc.)
Secondly, in keeping with the structural reform of the financial system, we intend to impose new restrictions on shareholding by banks, and at the same time, with the aim of facilitating the disposal of shares held by the banks, we intend quickly to establish the banks' shareholdings purchase corporation as a provider of a safety net that could complement the sale of such stocks to the market. The FSA submitted the Bill for Limitations on Shareholding, by Banks on September 28 to achieve these objectives. It should also be noted that the deliberation of the Bill for the Partial Amendment of the Banking Law, relating to the establishment of rules related to bank's major shareholders and to certain deregulation measures, has been carried over to the current Diet session from the previous session.
(Structural Reform of the Securities Market)
Thirdly, the FSA announced the Program for Structural Reform of the Securities Markets on August 8, with the aim of developing an environment for individual investors to actively participate in the market and of enhancing the functions of direct financing through the securities markets. Based on the Program, the FSA will continue developing the infrastructure to improve individual investors' confidence in the securities markets, encourage the creation of investment trusts that are attractive to individual investors, and promote the education of investors, and take other steps.
Based on these policies, the FSA will devote every effort to stabilize and stimulate the Japanese financial system. We sincerely request your understanding and support.
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