Press Conference by Shozaburo Jimi, Minister for Financial Services

(Excerpt)

(Friday, November 5, 2010, from 10:09 a.m. to 10:30 a.m.)

[Opening Remarks by Minister Jimi]

I have nothing in particular to report to you today.

[Questions & Answers]

Q.

According to a media report that came out today, there is a suspected case of insider trading by an external director of Seiyu - can you please explain how the case is being dealt with at this point in time?

A.

 I am aware of such a case being covered by the media, but I would like to refrain from making any comments about the status of investigation of any individual case of violation, as you know.  Generally speaking, though, the Securities and Exchange Surveillance Commission is responsible for monitoring markets rigorously for the purpose of ensuring fairness and investor protection in securities trading and is expected to take a strict line on any incidence found to involve an act of statutory violation, based on the investigations that it conducts on an as-needed basis.

Q.

It has come to light that Resona Holdings is planning to increase its capital and, using the funds, to repay the public funds injected into it.  Please tell us how you are receiving this news.

A.

I am aware of the news being reported by the media but, considering that a decision on any capital boost and public funds repayment is in the realm of a capitalization policy of an individual financial institution, I would like to refrain from making any comment.

My understanding is that Resona Holdings has issued a comment indicating that there is no fact of such a decision having been made at this point in time.

In any case, if you allow me to speak generally, there is an established procedure regarding a public funds repayment, under which the government and the Deposit Insurance Corporation of Japan examine such repayment, upon submission by a bank of its proposal to make the repayment, in accordance with three basic principles: first, maintaining sound management of the financial institutions; second, avoiding public costs, and; third, stabilizing the financial system.

Q.

I am Nakazawa from the Real Estate Economic Research Institute.

I believe that you have, right from the days you when were not a Minister, always arguing for leaving deflation behind and now, relating to this subject, the second round of the quantitative easing policy of the FRB (Federal Reserve Board) was announced yesterday. Japan's central bank has also decided to purchase assets to enter in its balance sheet. That said, I believe that the role that the Financial Services Agency (FSA) can play in ensuring that cash should be circulated in markets and households is extremely large - I mean, large in terms of its regulatory role - I would like to ask you how the FSA is going to work with the central bank in this regard.

A.

Back in August, I met with FRB or Federal Reserve Board Chairman Bernanke of the United States.  When I was in New York, I also met with Mr. Dudley, who is a member of the Federal Open Market Committee (FOMC), a regional representative of the FRB and also the president of the Federal Reserve Bank of New York. He is Vice-Chair of the FOMC. Regional representatives are - well, because America is so big, presidents of regional Federal Reserve Banks, such as those in Boston and Kansas, serve in the FOMC on a rotating basis. There are a total of, if I remember right, five such members. Then there is the FRB also serving the function.  The FRB is supposed to have seven members, including Chairman Bernanke, but I think that it is currently six because of one Governor post remaining vacant.

That the decision to apply the additional quantitative easing policy was made at their two-day meeting is for sure something that all of you already well know.  The focal point of this policy, which does involve a variety of old, familiar issues, rests with, among other things, a decision to buy 50 trillion yen worth of U.S. government bonds or whether or not to maintain policy interest rates between 0% and 0.25%. In the case of the Bank of Japan, however, it is between 0% and 0.1%, I believe. As it is the FOMC's decision, the FSA is intent on keeping a close watch on any impact that it may have on exchange markets or financial markets.  A very close watch, because it is a very significant moment.

Having said that, the fact is that individual stock prices, interest rates and exchange rates are determined in marketplaces as a result of various factors - hence, it is commonly said that "If you want to know about a market, ask the market."  I would rather refrain from making any comments, considering the difficulty of identifying causes of any fluctuations, but I will keep a close watch on any movements.

(End)