Press Conference by Tatsuya Ito, Minister for Financial Services

(Excerpt)

October 31, 2005

Q.

I wonder if you would please give us your reflections on the past one year and two months that you spent as the Minister for Financial Services, and also comment on the future tasks for financial policy administration?

A.

Looking back at the past year, we completed the financial revival and ended full government guarantee of savings deposits under the directive of the Prime Minister. Regarding these tasks, I believe that we succeeded in eliminating the full savings deposit guarantee as originally scheduled. Furthermore, we managed to restore the credibility of the Japan's financial system by meeting goals of the Program for Financial Revival.

Regarding the task of strengthening the functions that are firmly linked to regions and contributing to the restoration of small and medium-sized corporations, as well as the revitalization of regional economies, we have until now implemented various measures that are based on the relationship banking action program. Under the new action program, plans are being submitted by regional financial institutions and continued efforts are being made. As a whole, I think that progress has been made.

The third of the directives was to construct a financial system that is capable of offering financial functions that are at the highest international level so as to meet new user needs as they arise. We created and announced the Program for Further Financial Reform last December. I believe that the policy guidelines for a two year period we published will be instrumental for constructing a user-oriented financial system that would be highly satisfactory to the Japanese people in the wake of the completion of the financial revival.

I did my best and worked hard on each of the tasks that I believed needed to be tackled under the directives of the Prime Minister. I feel that we prevailed over obstacles and moved forward one task at a time.

As for future tasks for financial administration, I consider the most significant future task to be the construction of a financial system that is vibrant and highly respected by the international community that emphasizes user needs through steady implementation of various measures of the Program for Further Financial Reform.

Q.

You remarked about a financial system that will be focused on users and received high marks from the international community. Specifically, what areas do you believe efforts should be directed at?

A.

As far as I am concerned, all my wishes have been incorporated into the Program for Further Financial Reform. It is important that we construct an environment that permits users to freely take advantage of Japan's financial functions and its financial market without restrictions, and by so doing establish user protection rules so as to ensure that users do not suffer unexpected loss or damage at the same time. We, as the government agency charged with supervisory responsibilities, must continue to strive to firmly plant financial administration that can be relied upon by the Japanese people.

Q.

You have been a member of the so-called commerce and industry clan. You belonged to the Economy, Trade and Industry Division of the Liberal Democratic Party for a number of years, then became the vice minister and eventually reached the position of the minister. I wonder if you would please share your thoughts on the challenges that the Japanese banking industry faces and the tasks that financial administration will have to address as you look back at them from the perspective of an outsider.

A.

The term ''commerce and industry clan'' seems to be on its way toward extinction. I do not look at the tasks from the perspective of a parliamentary clan member. I personally have always believed that there were two important perspectives that must be adopted in structural reform efforts. One is an offensive structural reform and the other is a defensive structural reform. The two must be promoted side by side. The biggest task of the offensive structural reform is to construct a favorable cycle of innovations and demand. This, along with other tasks, must be tackled. In contrast, the greatest challenge in the defensive structural reform, I believe, has been the problem of non-performing loans. Until recently, Japanese financial institutions had a hard time moving forward because they were bound by their non-performing loans problems. The current phase that surrounds Japan's finance is taking a dramatic leap as these problems are being resolved. I believe that it is extremely important that financial institutions offer financial products and services that give high levels of satisfaction to users by grasping users' needs. I am confident that the Japanese banking industry has enormous potential. It is therefore essential that we press forward with continued regulatory reform to bring this potential to the front. At the same time, we will have to construct rules to protect users, as it is important to provide comprehensive user protection. For this reason, I count on the executives of financial institutions to look straight in the eyes of their users to find their needs and offer financial services that give high levels of satisfaction to the users.

Q.

Would you please comment on the administrative action against Meiji Yasuda Life Insurance Company that was announced last Friday, reviewing the incident in the framework of user protection that you just mentioned?

A.

Regarding the latest problems of Meiji Yasuda Life Insurance Company, it is highly regrettable that improper non-payment occurred in a number of cases and that policies were handled improperly in total disregard of policyholder protection. I therefore expect that the latest disciplinary action will prompt a thorough investigation of the causes of the problem and that effective measures to improve business practice will be adopted. The FSA, for our part, intends to carefully monitor such efforts in the future.

(End)