Press Conference by Shizuka Kamei, Minister for Financial Services

(Excerpt)

(Friday, November 20, 2009, from 8:53 a.m. to 9:10 a.m.)

[Opening Remarks by Minister Kamei]

Good morning.

Thanks to the efforts made by all the people concerned, we have overcome one critical hurdle. We have (with the passage of the Bill on Extraordinary Measures to Facilitate Financing for Small and Medium-Size Enterprises, etc. through the House of Representatives) completed a quarter of our overall work, as the House of Representatives is one of the two chambers of the Diet (and there is another bill remaining to be passed through both chambers).

With a renewed resolve, we will strive to enact both bills we have submitted.

[Questions and Answers]

Q.

How do you feel about the fact that this bill was railroaded through late at night, and when do you plan to put it into force?

A.

As we intend to put it into force as soon as it is enacted, we are trying to complete the revision of the financial inspection manual. The end of the year is around the corner, so I instructed FSA staff to finish the work quickly. We will do our best.

Q.

Am I correct in understanding that it will be put into force around December?

A.

After being enacted in November, it will be put into force around that time. Individual financial institutions are already starting to make preparations accordingly. Financial institutions, including government-affiliated ones under the jurisdiction of the Ministry of Economy, Trade and Industry, are making preparations on the assumption that this bill will be enacted. Some of them are already setting up relevant sections, so I expect that intended results will be achieved toward the end of the year.

Q.

Regarding the railroading of the Bill on Extraordinary Measures to Facilitate Financing for Small and Medium-Size Enterprises, etc., the opposition camp is criticizing a lack of adequate debate. Could you comment on that?

A.

As the proponent of the bill, I made conscientious explanations, and I have the impression that the bill has been well understood - although it may not be a perfect understanding - as a result of a fairly in-depth debate.

As for the complaint that we did not present a (draft revised) financial inspection manual before the bill was put to a vote, we are now working on the revision while taking into consideration what has been discussed in the Diet. As it is impossible to present the manual in complete form, we have shown its outline. I am sure that we have acted in a conscientious manner.

The House of Representatives' Committee on Financial Affairs should continue to follow up on this law. Once the law is enacted, the Diet should not forget about it but properly follow up on it, so I expect to receive various opinions reflecting the state of the law's, implementation and I intend to reflect them in our supervision and inspection.

Q.

Yesterday, Yoshifumi Nishikawa, the (former) president of Japan Post, said in an interview with us that the market will not approve the exemption of Japan Post Bank and Japan Post Insurance from the application of the Banking Act and the Insurance Business Act, respectively, as it would mean the creation of special companies. Could you comment on that?

A.

As I have been saying, we are planning to have all the postal businesses, including Japan Post Bank and Japan Post Insurance, provide renewed services under renewed ideas. In relation to this, we will need to consider how to deal with the issue that you mentioned now. We will also need to consider such issues as the terms of competition with private-sector financial institutions as well as a cooperative relationship with them. I suppose that (former) President Nishikawa did not know our discussion on what new services the postal businesses may provide when he made that comment.

Q.

The BOJ (Bank of Japan) is holding a two-day Monetary Policy Meeting that ends today. You have made various comments regarding the BOJ. I expect that the government and the BOJ will probably need to consider working together to take some policy action toward the end of the year. What are you hoping the BOJ will do?

A.

As I have been saying, I hope that the BOJ will fulfill its responsibility based on an appropriate judgment of the economic condition. I hope that the BOJ will seriously consider what role it should play in this serious situation, in which the deflation gap (supply-demand gap) may reach nearly 40 trillion yen. It would be wrong if the BOJ acted based on optimistic expectations merely focusing on the state of major companies. The Japanese economy is not functioning only in the activities of major cities and major companies. The economy comprises the lives of all people across the Japanese Archipelago, including people working for SMEs and those engaging in the agriculture, fisheries and other industries. Therefore, the BOJ should examine the actual situation of their lives, rather than merely looking at statistics, and consider what role it should play amid the growing deflationary pressure. Although the BOJ's independence should not be ignored, it is not independent without any constraint. The BOJ needs to cooperate with the fiscal authorities and coordinate its overall policy with the policy of the government as a whole, so it must act while keeping that in mind.

Since I was a member of the LDP (Liberal Democratic Party), I have been arguing that point, and I would like to remind the BOJ of that point especially strongly now, as we are at a critical time.

(End)