Press Conference by Shizuka Kamei, Minister for Financial Services

(Excerpt)

(Wednesday, November 4, 2009, from 8:50 a.m. to 8:58 a.m.)

[Questions and Answers]

Q.

Regarding the Money Lending Act (Act on Controls, etc. on Money Lending), I hear that a study on how to conduct regulation will be done in advance in preparation for the act's full enforcement in June next year. Could you tell us about your thinking regarding regulation?

A.

I am not thinking of tampering with interest rates or the restriction on the loan amount articulated in the act that is expected to be enforced. Nevertheless, we are doing a study on issues related to its enforcement. The issues include advertising and whether or not the information concerning people with multiple debts can be placed under a single organization and used in an appropriate way. As such information is not accumulated in a single organization now, how to do that will be studied. While we study various enforcement-related issues, we do not expect to revise the essential parts of the law itself.

Q.

Regarding this law, is there room for considering the possibility of postponing the date of its enforcement?

A.

I told you about that just now. Didn't you listen to what I said?

Q.

You said that the enforcement… From within the industry, there are calls for postponing the enforcement…

A.

I told you about that just now. Before the law is put into force, we will study enforcement-related issues.

Q.

Will you do that with the possibility of a postponement in mind?

A.

The postponement means an amendment of the law. I told you that I would not do such a thing.

Q.

This weekend, a meeting of the G-20 Finance Ministers will be held. While various matters, including the capital adequacy ratio requirement and executive pay at banks, are expected to be on the agenda, could you tell us what arguments Japan will make?

A.

As for the capital adequacy ratio, as I have been saying, it is absolutely necessary that banks that raise funds and do other business activities internationally conform to the international standards. However, I do not think that it is necessary to strictly apply the Basel accord to banks that do not operate internationally. Although it is important to conduct business while conforming to such standards as a certain yardstick, a drop below the yardstick level would not immediately become an issue to fuss about. Ideally, all financial institutions should operate in accordance with a universal standard in the future. However, that would be difficult. Each country has its own circumstances, and we have already been arguing this point.

Regarding executive pay, too, circumstances vary from country to country. While it is natural that managers receive pay based on the assessment of their financial business, while fulfilling the social responsibility, there are variable factors, including the salary base in each country, so we cannot apply a universal standard around the world.

Q.

In relation to the capital adequacy ratio, could you tell us about your view on the trend of enhancing the capital requirement in terms of quality and quantity for internationally operating financial institutions?

A.

Japan alone should not be left behind amid the global trend of enhancing the capital requirement. It is natural to make efforts to go with the global trend. Nevertheless, as Japan has its own circumstances, a one-size-fits-all approach cannot be applied.

Q.

Regarding the Money Lending Act, Mr. Otsuka (senior vice minister) has said that he will do a study with the possibility of a postponement in mind. Does this indicate a disagreement between him and you?

A.

That is wrong. He and I are in complete agreement. I do not have in mind the possibility of a postponement. Senior Vice Minister Otsuka is in agreement with me on this. We will study various enforcement-related issues so as to ensure smooth enforcement. As I said earlier, I am not thinking of postponing the enforcement date or revising the essential parts of the law. That is my thinking under the current circumstances, although it will be a different story if the circumstances, including the economic situation, change significantly. Another thing that I would like to mention is that a problem like this should be resolved from a comprehensive perspective through more appropriate provisions of loans by ordinary financial institutions, including public-sector ones. Nobody wants to borrow a loan at a high interest rate. Although each borrower borrows a loan according to his own needs, there are various issues regarding the lender side, such as to what degree lenders can meet the borrower's needs. Whether the lenders are properly meeting the borrowers' needs is a major issue for now. If we are to properly deal with such issues and prevent borrowers from turning to underground lenders because of the enforcement of this law, it is absolutely necessary that other financial institutions make their own efforts to meet the needs of such borrowers.

(End)