Press Conference by the Minister for Financial Services

(Excerpt)

December 26 , 2003

Q.

As this is the last press conference of the year, please provide a recap of the year. It was truly a significant year in the history of the financial sector, considering that Article 102 of the Deposit Insurance Law was applied on two occasions in a single year. On the other hand, there were various events in the context of approaching the goal of solving the pending non-performing loan (NPL) problem. What is your opinion?

A.

Since the collapse of bubble economy, the Japanese economy has suffered from long-term stagnation for more than ten years. There are many causes of the stagnation, but I think some of them are especially important and must to be resolved.

Among them, the top priority is to adjust balance sheets. The adjustment of balance sheets is an NPL problem from the banks' point of view, while it is a problem of overborrowing from companies' point of view. It is fair to say that the situation, which has dragged on for ten years with little progress, clearly began to change this year.

However, as we are currently tackling a problem that could not be resolved for more than ten years, we believe the path towards solving the problem is neither simple nor smooth. Now that we begin to see the goal, we will forge ahead towards it. A number of problems that need to be overcome may arise in the future. However, we will enhance and develop the financial system further from next year onwards, firmly acknowledging the fact that we started heading towards that goal this year.