Press Conference by the Minister for Financial Services

(Excerpt)

11 October, 2002

At the ministerial roundtable meeting, the Prime Minister stated that he would take the royal road of policies notwithstanding the recent market trends, economic trends and various debates. He mentioned that the steady promotion of the reform in the four sectors would be the royal road of policies to Japan's recovery, and sustainable economic growth would only be possible by taking this road. The basic policy has been carried through, so there is no policy change. He stated that he wishes the reform to be properly carried out without discussing side issues, bearing in mind that the main issue is the reform in the four sectors.

Q.

In regard to the royal road of policies mentioned by the Prime Minister, it appears that it has become difficult recently for the market to figure out what the policy-making authorities are thinking and the direction they are heading. With reference to the term ''royal road'', could you please explain the policy direction again?

A.

The policy direction aimed by the current administration is extremely clear. The Basic Policies in June 2001, the Structural Reform and Mid-term Perspectives in January 2002, which indicated the Basic Policies in the form of a macro-vision, and the so-called follow-up to the Basic Policies in 2002, which enhances the stimulation to realize the goal shown in the Structural Reform and Mid-term Perspectives- the reform of the four sectors was brought about in that context. The reform of the four sectors refers to: the reform of fiscal expenditure; the reform of fiscal revenue that is taxation; the reform of the financial system; and regulatory reform. ''The Special Zones for Structural Reform'' today is part of regulatory reform. With respect to the financial system, we are currently having intense discussions in the Project Team, and in my opinion, the direction itself is clear and properly on track. This is the royal road referred to by the Prime Minister: it is about further strengthening policies, and showing them more quickly, on a larger scale, and in a more easy-to-understand manner. Therefore, October will be an extremely important month for further clarifying the royal road referred to by the Prime Minister.

Q.

Yesterday, the U.S. Ambassador Mr. Howard H. Baker, Jr. paid a courtesy call on the Minister for Financial Services. Were any exchanges made in regard to the non-performing loan (NPL) problem in Japan?

A.

As I have explained to you, I have not made any decisions yet, and I have not said anything in relation to that. Under such circumstances, I told him that I had formed a Project Team to make truly firm plans, talked about the framework of the Project Team and so on, and informed him that I will truly and properly engage in the reform of the four sectors. He recognized that it is an extremely difficult task -he praised Prime Minister Koizumi's courage to tackle these difficulties and encouraged us to do a good job.

Q.

You have said that nothing will be publicly disclosed about the three meetings held so far by the Project Team. Nonetheless, could you please give us an idea about the progress of the discussions, and what kind of discussions you would like to have today, to the extent that you can?

A.

As I promised initially, I prefer to tell you about the topics of discussions and the opinions expressed after the discussions have been crystallized, in order to avoid confusion.

However, I can tell you one thing about the atmosphere of the discussions: it is extremely lively. Discussions are extremely lively and constructive. As for the level of discussions, it is extremely technical and advanced. Although only two meetings have practically been held, I intend to call upon a great amount of expertise in Japan amid these circumstances and proceed with discussions with the aim to further strengthen the Japanese economy, by strengthening the banks, and in turn, the Japanese economy.

Also, it is extremely important to revitalize companies and industries. In a sense, this lies on the borderline between my role as the Minister for Financial Services and the Minister of State for Economic and Fiscal Policy. As everyone is aware of this as a matter of course, I intend to keep it in mind as a critical agenda.