Press Conference by Kaoru Yosano, Minister of Finance and Minister for Financial Services and Economic and Fiscal Policy
May 8, 2009
[Opening Remarks by Minister Yosano]
I do not have anything particular to report to you.
[Questions and Answers]
According to the results of the stress tests conducted on U.S. financial institutions that were announced early this morning Japan time, 10 banks were notified of capital shortfalls totaling 7.3 trillion yen. FRB Chairman Bernanke pointed out that the results are very reassuring for investors, and many market participants apparently gave the results a positive assessment, regarding them as better than expected. How do you view the results of the stress tests, and do you expect that concerns over the U.S. financial system will be dispelled?
I presume that the U.S. government has conducted the stress tests in a conscientious manner. The fact that the capital shortfalls found as a result of the tests were no larger than that figure — which can be covered by the funds secured through existing budgetary measures — indicates that the condition of the entire financial system is far better than we thought, so the results were reassuring for us.
In addition, many banks do not need any capital injection. So, if capital injection into banks with a capital shortfall begins, it will contribute to stabilizing the financial system further.
In relation to the stress tests, there is the view that the weight of common shares in the capital of banks may increase compared with preferred shares. Some people expect Japanese banks will be likewise forced to increase their capital by issuing common shares. Could you tell us about your view on the state of banks’ capital?
There has already been an argument that the Tier I core capital should be enhanced. Although it is difficult to predict how this issue will develop in Japan, it is true that there is still such an argument.
I would like to ask you about Japan’s stock market. Yesterday, the Nikkei Average hit a new high for this year, and a bullish sentiment about the future course of the economy is apparently arising. How do you view the current stock price level and the present economic condition?
As stock prices are a leading indicator of the economy, the (Nikkei Average’s) rise to around 9,400 is very welcome. I presume that this has significantly improved the state of the assets held by banks as well as life and non-life insurance companies. I strongly hope that stock prices will stabilize further.
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