Press Conference by Tadahiro Matsushita, Minister for Financial Services

(Excerpt)

(Tuesday, June 5, 2012, from 9:39 a.m. to 9:56 a.m.)

[Opening Remarks by Minister Matsushita]

At the Cabinet meeting, approval was sought for the Crown Prince's visit to Thailand, Cambodia and Laos.

Relevant ministers reported on white papers concerning children and youth, and concerning measures to deal with the shrinking population of children and on the policy for promoting basic manufacturing technologies.

In relation to our duties, Vice Minister for Internal Affairs and Communications Morita was appointed to oversee matters related to postal services, including activity in the Diet.

As Minister of Economy, Trade and Industry Edano is on a foreign trip, Minister of Environment and Nuclear Power Policy and Administration Hosono is serving as the acting minister of economy, trade and industry.

[Questions & Answers]

Q.

Yesterday, stock prices on the Tokyo Stock Exchange fell to a new low for this year and the lowest level in 29 years, and concerns over global stock declines are growing. What benchmarks and developments are you paying attention to in relation to the stability of the financial system?

A.

Yesterday, the Nikkei stock average fell to the lowest level for this year. As was mentioned yesterday, stock prices are continuing to drop. This comes amid uncertainty over the Greek re-election, scheduled for June 17, and a recovery in the U.S. labor market. I hear that in the market, the view is prevailing that there are moves to avert risks, as shown by the stock price drop, the euro's decline, the yen's rise and the rising yields on government bonds issued by peripheral European countries.

As I mentioned yesterday, I would like to refrain from commenting on market developments. As the minister for financial services, I will continue to closely monitor market developments with strong interest while maintaining cooperation with relevant cabinet ministers and the Bank of Japan.

In the U.S. market, prices dropped 0.14%, or about 17 dollars, to the lowest level for this year. In Germany, prices also dropped 1.1% to the lowest level for this year. In France, prices rose 0.1%, while the U.K market was closed for a holiday. I will continue to closely watch market development with strong interest.

Q.

A media report said that in relation to the public offering of new shares in Tokyo Electric Power Company, the Securities and Exchange Surveillance Commission (SESC) asked the U.S. Securities and Exchange Commission (SEC) for cooperation in the investigation of a suspected case of insider trading. What do you think of cooperation with foreign authorities in investigation of insider trading?

A.

I understand that you are referring to a Nikkei Shimbun article dated June 2.

I am aware that the SESC has built a close cooperative relationship with foreign securities regulatory authorities by engaging in cooperation based on the Multilateral Memorandum of Understanding on Cooperation and Information Exchange (MMOU), and similar bilateral arrangements.

I would like to refrain from commenting on specific cases. However, generally speaking, I believe that the fairness and transparency of the Japanese market is improved when the SESC conducts highly effective market surveillance over problems that could undermine confidence in the market, such as insider trading relating to public offering of new shares, while cooperating with foreign authorities as needed.

I am also aware of a media report asserting that the SESC has asked the U.S. SEC for cooperation in investigation and will recommend the imposition of an administrative monetary penalty on foreign investors for the first time. However, as this is a specific matter handled by the SESC, I would like to refrain from making comments as the minister for financial services.

Q.

I am Kataoka from Hoken Ginko Nippo.

Could you offer you thoughts, if you have any, on the insurance sector?

A.

In relation to the postal businesses?

Q.

I would like you to talk about insurance-related issues in which you are interested, regardless of whether or not they are related to the postal businesses.

A.

I was questioned about that in the Diet yesterday. Because the size of the postal insurance business is large although it has been reduced, we will handle matters relating to the insurance sector cautiously in relation to economic cooperation while collecting information concerning developments in the United States and Europe, and in the Asia-Pacific region. If there is some problem that obstructs overall economic cooperation, we must rack our brains to deal with it. That is the issue of interest for me now.

Q.

I am Kakiuchi from IT media.

I would like you to tell me about your thoughts on international accounting standards. Could you tell me about the future direction of the discussion being held by the Business Accounting Council?

A.

I have not yet fully grasped the background to this matter. I would like to deal with it after completing the transfer of duties from former Minister Jimi this afternoon. The EU's approach is to assess the current enterprise value based on market prices of real estate assets. Unlike the EU, Japan assesses real estate and other assets at the book value. I hear that profits and losses in each business term are calculated and assessed under their different approaches. We will form a consensus view after checking on that point during my consultation with Minister Jimi to complete the transfer of duties. Please give me some time.

Q.

Could you tell me about your thoughts on another extension of the SME Financing Facilitation Act, as your answer yesterday was somewhat vague?

A.

I may have caused a bit of confusion. On that point, too, I will check with Mr. Jimi and we will form a consensus view. I regard former Minister Jimi's decision to extend the SME Financing Facilitation Act until the end of March next year in the last extension of the law as a government policy, and I understand that the decision remains unchanged.

We need to pursue an exit strategy to truly improve the business management of SMEs in light of the last extension of the SME Financing Facilitation Act. What should be done to enable companies to truly achieve recovery, rather than merely repaying loans or having loans rescheduled? Even a small amount of funds may be helpful in some cases, so I need to do my study, including on matters like that. In that sense, I would like to review various matters as I said, and I will check with Minister Jimi today.

Q.

I am Yoshida from Kinzai Institute for Financial Affairs.

Your predecessors, such as former Ministers Kamei and Jimi, emphasized political initiative and on some occasions, they appeared to have set forth important policies in a top-down fashion and in a bold manner. At your press conference last night, you referred to your intention to seek the support of civil servants several times. What is your thought on the balance between political initiative and utilization of civil servants?

A.

I would like to tap their knowledge. While I will receive information and analysis from them, I will make decisions as needed as a politician.

Q.

Did you convene a morning meeting at the Financial Services Agency (FSA) today? If so, what instructions did you give to the FSA staff?

A.

I have not yet convened a meeting of senior FSA officials to tell them about my thinking. I reported at the cabinet meeting and prepared materials for this press conference.

After consulting with former Minister Jimi to complete the transfer of duties, I will appropriately perform my duties.

Thank you very much.

(End)