Press Conference by Kaoru Yosano, Minister of Finance and Minister for Financial Services

(Excerpt)

September 8, 2009

[Opening Remarks by Minister Yosano]

1. Exit Strategy
2. Review of the regulatory capital framework

[Questions and Answers]

Q.

At the recent meeting of the G-20 finance ministers and central bank governors, the importance of continuing economic stimulus measures and considering an exit strategy following the economic recovery was confirmed. Regarding Japan's fiscal condition, while a new goal for fiscal consolidation was set forth under the Basic Policy for Fiscal and Economic Management, the Democratic Party of Japan (DPJ) has not revealed a specific policy concerning fiscal consolidation. In light of this, how do you think Japan should consider an exit strategy on the fiscal front?

A.

We must consider an exit strategy concerning two matters. One is the expanded amount of fiscal expenditures to finance economic stimulus measures for the creation of demand. The other is the monetary policy, including quantitative easing and low interest rates as well as unconventional measures such as purchases of CP (commercial paper) and corporate bonds, although the impact of these purchasing programs have been limited now. I believe there is an international consensus that neither fiscal nor monetary remedies like these should be continued indefinitely. I welcome the fact that a serious debate about an exit strategy has started because it is an indication of an improvement in sentiment around the world. While it would be too much to expect the DPJ to start out doing work perfectly, I hope that the party will recognize the need to discuss matters like a goal for fiscal consolidation and fiscal discipline once it assumes a position of responsibility. I also hope that it will behave in a responsible manner of its own accord.

Q.

I understand that the direction of the revision of the international capital adequacy ratio requirement was determined at the G-20 meeting and a meeting of the Basel Committee that followed it. In Japan, there are concerns that the revision may lead to undue curbs on new loans. What is your view on this matter?

A.

A conclusion has not been reached concerning this matter. However, we see the debate moving toward enhancing the capital adequacy ratio requirement in terms of both quality and quantity. The specifics will be discussed at various organizations, including the Basel Committee, and it is desirable that decisions are made with due consideration of the circumstances of Japanese financial institutions and Japan's financial situation. Whether it is really desirable to apply one size fits all standards across the board needs much more discussion.

Q.

The reality appears to be that as the United States and the United Kingdom lead the debate toward strengthening the standards, it is difficult for Japan to have its voice heard at international meetings. What should Japan do to have its voice heard?

A.

I am worried that Japan has been somewhat losing its say with regard to not only financial affairs but also trade and national security issues and matters related to the United Nations. There are a variety of reasons for this, and I believe that the new government should aim to secure sufficient opportunities to express its opinions in order to defend Japan's position and increase its say in every field. While negotiations about capital requirement at the Basel Committee involve very technical matters, the opinions of the United States and Europe have a significant influence, so Japan should devote efforts to pressing its case for what it believes is right.

(End)