Press Conference by Yoshimi Watanabe,Minister for Financial Services
June 10, 2008
[Opening Remarks by Minister Watanabe]
Today, the headquarters for the multiple debt problem obtained cabinet approval for its follow-up report on the Program to Remedy the Multiple Debt Problem.
Also, as the chief of the headquarters, I decided to implement a campaign to enhance consultations for multiple debtors. Last December, a similar campaign was implemented across the country over a one-week period. In this year's campaign, we will hold free-of-charge consultations from September to December. For details, please contact the office of the counselor for the credit system at the Planning and Coordination Bureau's Planning Division.
I have no more specific matters to announce.
[Questions and Answers]
I would like to ask you about emissions credit trading. Yesterday, Prime Minister Fukuda announced a plan to introduce emissions credit trading this autumn. What do you think of this plan, which has drawn strong opposition from industry? The FSA (Financial Services Agency) has until now been involved in this matter through the review of the regulation on the scope of business activities in which insurance companies are permitted to engage. Could you tell me how the FSA will be involved in the establishment of the emissions credit trading market, which I think must be tackled as a most important task from now on, as well as describe the agency's current involvement in it?
Realizing a ''low-carbon society'' through the achievement of a ''low-carbon revolution''is a major policy of the Fukuda cabinet. As we try to reduce CO2 emissions by more than half by 2050, we must make an enormous effort. We will have to consider every possible measure so that we can realize a low-carbon society. In this respect, I believe that emissions credit trading will be very effective. The FSA has implemented deregulation concerning emissions credit trading under the revised Financial Instrument and Exchange Act, which was enacted in the current Diet session. It will be necessary to facilitate emissions credit trading by ensuring market stability.
What do you think of the report, issued last week, on Nomura Securities' internal investigation into the insider trading case involving an employee of the company, which included measures to prevent the recurrence of similar cases?
I have read the report. We are now examining its contents closely.
How effective do you expect the preventive measures to be?
We are examining the report in relation to such matters.
I have a question about financing for small and medium size enterprises (SMEs). I think that there is concern that financial institutions will curb new loans to SMEs or try to withdraw existing loans. What is your thinking in this regard?
I am greatly concerned about this matter. I have instructed working-level officials to quickly investigate and analyze financial institutions' move to curb loans and devise countermeasures. The deputy minister has held symposiums regarding this problem in various locations. The FSA as a whole will tackle this problem.
From a long-term perspective, how do you view the need to ensure smooth financing for SMEs through the activities of financial institutions willing to take a ''middle-risk, middle-return'' approach?
This is exactly what I think is necessary. The approach of taking risks commensurate with returns is one that has rarely been embraced by Japanese financial institutions. As a result, the ''middle risk, middle return'' business has been very sluggish. As we have seen attempts to undertake this business approach result in failure, we are wondering what has caused such failures. Unless financial business based on the ''middle risk, middle return'' approach grows, it will be impossible to establish an interest rate system that properly reflects market mechanisms. Obviously, in such a case, borrowers will be deprived of an opportunity to receive better financial service, and therefore it is urgent that we foster financial business based on the ''middle risk, middle return'' approach.
I would like to ask you about the surging price of crude oil. The crude oil price renewed its record high in New York, and joint statements expressing serious concern about this price surge were issued at energy ministers' meetings held over the weekend. At these meetings, energy ministers agreed to analyze the background of the high crude oil price. Yesterday, the vice minister of economy, trade and industry voiced anger over what he described as the effects of financial speculation on the price of crude oil. What do you think lies behind the high price of crude oil?
It has been pointed out that speculation has driven up the price of crude oil by dozens of yen (per barrel). Since the subprime mortgage crisis broke out last year, stock prices have fallen every time subprime-related problems have emerged, causing a shift of funds from the stock market to oil futures and other commodities markets. Therefore, what we should do for the moment is find fundamental solutions to the problems facing the financial markets, the problems plaguing LCFIs (large and complex financial institutions) in particular. Unfortunately, financial and capital markets remain unstable. In the U.S. and European markets, there is still a wide spread between the yields on government bonds and other securities. While raising funds remains difficult within the current situation, the outflow of money from the financial and capital markets to the commodities markets is ongoing. Therefore, the primary task we must tackle for the moment in order to resolve this situation is to stabilize the financial and capital markets.
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