Press Conference by the Minister for Financial Services

(Excerpt)

20 September, 2002

Q.

The other day, the statistics on land prices were announced, which clearly showed stronger signs of deflation. Under these circumstances, is it possible to accelerate the disposal of non-performing loans (NPLs)?

A.

In general, the situation surrounding the NPL problem is not good considering that not just land prices are falling but the economy as a whole is tending towards deflation. We certainly need to be truly committed to dealing with the situation, in consideration of various matters, so as to accelerate the disposal of NPLs.

Q.

The Bank of Japan (BOJ) has made a drastic decision in regard to directly purchasing banks' shareholdings. However, some BOJ officials claim, extremely strongly, that ''the BOJ has done everything it could to stabilize the financial system, so now it is the government's turn to take drastic measures.'' In what way are you prepared or inclined to meet such expectations from the BOJ?

A.

We are inclined to do that. Since April 2001, we have been hammering out a series of measures, earnestly in hope of disposing of NPLs as soon as possible. It is my understanding that these efforts have been acknowledged. Meanwhile, some observers have started to claim that if the freefall in stock prices continues, concerns about the strength of financial institutions might arise as a result. In my opinion, the measures taken by the BOJ will be an additional factor that will help push up stock prices.

Based on the Prime Minister's order to accelerate the disposal of NPLs, we are working on ways for the Financial Services Agency (FSA) to truly achieve this in full force.

Q.

There is a strong sense of tension in BOJ's view on the strength of financial institutions and the financial system. Does this indicate that its view is quite different from that of FSA?

A.

We are constantly keeping an eye on the trends in stock prices with a sense of tension, and we pay utmost attention to how they might affect banks' strength. Therefore, I do not think there is any substantial difference in views on that matter.