Press Conference by the Minister for Financial Services

(Excerpt)

January 15 , 2003

During my visit to Australia, which was the first one in 15 years or so for me, I had extremely valuable meeting experiences.

Out of a number of events, I would like to comment especially on three matters. Yesterday, I held a seminar at the Australian National University (ANU), in which I was able to spend some time talking about the current status of the Japanese economy, the meaning of structural reform and so forth.

Actually, what surprised me the most was that, even though it was not the best time of the year to hold a meeting in Australia due to the fact that the nation is still in holiday season, an extremely large number of people cut their holiday short and gathered for the meeting, as many as 200 people, mainly members of the ANU. The discussions were very constructive. More than anything else, it reminded me painfully that the interest in the Japanese economy is extremely strong. In that sense, I strongly felt that our responsibilities are extremely heavy in successfully carrying out the reform in Japan and stimulating the economy.

In terms of content, I believe I was able to give a thorough explanation of the economic significance of the structural reform in Japan, and further, its political significance. In terms of fulfilling our responsibility to explain the reform to the international community, it was highly meaningful to have had this kind of event at the ANU, which is one of the top universities in Australia.

With members of the Department of Finance and Administration, we were able to exchange our opinions broadly about the methods of management reform on the financial front, which needs to be addressed in Japan in the days ahead. Australia is one of the leading countries in terms of new public management. Though we are studying new public management in our own way in Japan, it was instructive to have been able to see firsthand various case studies in concrete terms, and the stance of the Australian financial authorities engaged in reform.

Today, I visited Sydney, where I had the opportunity to talk with Mr. Ian Macfarlane, the Governor of the Reserve Bank of Australia (RBA). Even from the RBA's point of view, the current deflation problem in Japan is an extremely crucial problem. Mr. Macfarlane has an extremely deep sense of awareness as to what kind of role the governments and the central banks should play when deflation is having a worldwide impact, rather than being a problem confined to Japan, and we were able to exchange our opinions from various angles.

Further, I explained in detail what kind of reform Prime Minister Junichiro Koizumi is trying to achieve, and how the current state of affairs is in concrete terms. Our exchange of opinions was extremely fruitful.

Q.

During the discussions with Mr. Macfarlane, how did he evaluate the measures to dispose of non-performing loans (NPLs)? Also, were there any talks about the current status of mega-banks in Japan?

A.

Mr. Macfarlane did not make any particular comment on the current status of mega-banks in Japan.

In regard to Japan's NPL problem, he stated that the current Koizumi Cabinet must tackle this extremely difficult problem, and told me that he sympathized with me for having the duty to deal with such a tough problem.

At the same time, however, Mr. Macfarlane and I both agreed that it would be unacceptable to run away from the problem just because it is difficult, and it would be impermissible to prolong the problem any further. I stated the need to prepare ourselves for the extremely difficult problem and make firm decisions step by step, and Mr. Macfarlane also made a similar comment.

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