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

(Excerpt)

September 11, 2009

[Question Items related to the FSA]

  1. Assessment of the Aso cabinet's measures to deal with the financial crisis
  2. Comments on the combining of the posts of the Minister of Finance and the Minister for Financial Services

[Questions and Answers]

Q.

It is nearly one year since the Lehman shock that triggered the financial crisis. As a minister who has been responsible for economic and fiscal policies over the past year, how do you assess the measures taken by the Aso cabinet to deal with the financial crisis? Also, do you think that those measures will stand the test of history as you said they should?

A.

For one thing, the government and the BOJ (Bank of Japan) succeeded in containing the credit crunch through cooperation with each other. We prevented the credit crunch from causing a further economic downturn. The CP market and the corporate bond market have now restored their normal functions, and the corporate fund-raising situation has improved significantly compared with one year ago. In particular, late last year, for example, I was very worried about rumors that a well-known company might be facing a cash squeeze. However, I believe that the BOJ and Japanese financial institutions, including government-affiliated ones, as well as the government, dealt with the financial crisis well. The financial situation is improving gradually around the world, too. In light of this, I would like to give high marks to the efforts made by the government, the BOJ and private-sector Japanese financial institutions. Although fiscal expenditures under the series of supplementary budgets and the initial budget for fiscal 2009 did not fully offset a drop in demand caused by a rapid fall in exports, they probably offset roughly half of the drop. The scale of the global credit crunch and economic crisis was such that at one time I was not sure what could happen. Although the financial system and the economy did not completely escape damage, we managed to limit the damage. Therefore, I assume that in the future, our economic and fiscal policy measures will be judged as having been successful, rather than as a failure.

Q.

During the financial crisis over the past year, the posts of the Minister of Finance and the Minister for Financial Services have been combined upon the instruction of Prime Minister Aso. Do you think this arrangement has worked well and should be continued at this time when the reform of international financial regulation is being debated? There are expectations that the incoming government will separate the posts again.

A.

In normal times, the Minister for Financial Services should have not much role to play or no heavy duty to perform. The FSA (Financial Services Agency) is headed by the FSA Commissioner, who is responsible for making decisions concerning day-to-day operation. The Minister for Financial Services has a role to play only in the event of an emergency like a financial crisis. In times of a financial crisis, it is an effective arrangement to have the Minister of Finance, who has authority over budget expenditures, concurrently serve as the Minister for Financial Services. Although some people are skeptical about this arrangement from the perspective of the independence of financial administration, I do not believe that there is any basis for denying the appropriateness of combining the two posts, because the FSA is legally headed by the FSA Commissioner and the responsibilities of the Minister for Financial Services are limited to such as acting as an interface of communication with the Diet and making political decisions concerning cross-ministerial matters during a crisis.

(End)

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