Press Conference by the Minister for Financial Services

(Excerpt)

December 3 , 2002

Q.

In the work schedule of the Program for Financial Revival, no deadline has been set only for deferred tax assets. Other new public funding schemes and so forth are to be discussed similarly at the Financial System Council, and are given a deadline of 6 months. Why has no deadline been set for deferred tax assets only?

Also, do you have a rough idea as to when things should be worked out? Please elaborate on these matters.

A.

As you pointed out, after much consideration, we decided not to set any deadlines for deferred tax assets in regard to when a conclusion should be drawn. There is only one reason for this: an extremely large number of uncertainties are involved when discussing this issue. As I have said on a number of occasions, it is partly to do with the issue concerning the tax framework. We are making requests in regard to the tax framework, but one of the challenges is what the tax framework is going to be like in the future.

Another challenge is how to deal with auditing firms in association with business accounting rules. We plan to request their strict application as well, and execute inspections on the deferred tax assets. We also need to figure out how that scheme will work.

Also, as a real-life issue, we hope to figure out how the capital adequacy of banks will change, reflecting the improvements in profitability. Under these circumstances, it is extremely difficult to set a deadline.

However, this does not necessarily mean that the discussions will take place in a tardy fashion. As a matter of course, a progress report should be made after the discussions have been held for 6 months or so. Solid discussions should take place, while properly defining what the current issues are, what has been agreed upon and what has not.

Q.

Does it mean that no regulations will be introduced if, for example, no tax measures are taken?

A.

No, it does not mean that at all.

Q.

Is it irrelevant?

A.

It is totally irrelevant. There are many independent factors that need to be taken into account on an individual basis. Of course, if there is a major shift in tax factors incidentally, it will undoubtedly have a massive impact on the solutions.

However, if other conditions remain unchanged, we are basically responsible for deciding how the supervision should be administered under those unchanged conditions. Therefore, we intend to give due consideration to other major factors and work on them, while examining matters thoroughly as an authority in financial sectors.