Press Conference by Ikko Nakatsuka, Minister for Financial Services

(Excerpt)

(Tuesday, December 18, 2012, from 11:19 a.m. to 11:35 a.m.)

[Questions & Answers]

Q.

What measures do you think the Financial Services Agency (FSA) should implement as its priorities under your successor after the change of government?

A.

There are deep uncertainties over the international economic situation, particularly the European situation, so the FSA must ensure the stability of Japan's financial system.

Next, the FSA must facilitate financing for small and medium-size enterprises (SMEs). In addition, the FSA has been pursuing the objective of invigorating local economies by facilitating financing for SMEs. I strongly hope that this effort will be continued. Regarding problems related to the transparency of the financial and capital markets, such as the AIJ case and insider trading cases related to public offerings, debate is ongoing at financial system councils, so the FSA should work on relevant bills that are expected to be introduced next year. The FSA should also contribute to economic growth. Under the Comprehensive Strategy for the Rebirth of Japan, we planned to establish a comprehensive exchange and introduce the Japanese version of the ISA (tax exemption for dividend income and capital gains related to small-amount listed stock investments), and I would like to request the FSA to properly work on the plan. Moreover, regarding support for the people affected by the Great East Japan Earthquake, there are various issues, including the double loan problem, so I would like the FSA to make increased efforts to properly deal with them.

Q.

Over the three years since the government of the Democratic Party of Japan put into force the SME Financing Facilitation Act, there have been various opinions, including praise and criticism. Overall, what do you think are this law's merits and demerits?

A.

Our government was inaugurated amid the European fiscal and financial problems that followed the Lehman Shock. We have been working to facilitate financing for SMEs for the past three years in this very severe environment. The number of corporate failures has declined steeply. In addition, I am very pleased that financial institutions have begun to deal with customers conscientiously.

On the other hand, some borrowers have applied for the modification of lending terms for a second or a third time, indicating that funding support alone does not bring successful results. In the future, it will be necessary to take measures that ensure the turnaround and growth of SMEs.

In April, we launched our policy package, whose contents are reflected in the recent economic package, so I hope that the FSA will continue to work on it as well.

Q.

What will change after the government of the Liberal Democratic Party and the New Komeito takes over? In particular, is there anything that may be changed in relation to the FSA? What are your expectations and concerns in that respect?

A.

I have listened to various debates in the Diet, and I don't think that there has been much objection to the basic direction of the efforts that we have been making over the past three years and three months. Of course, regarding individual issues, there have been minor changes, such as amendments to laws. I do not expect a 180-degree turn of policy in the field of financial administration that is under the FSA's jurisdiction.

Q.

I hear that Chairman Nishimuro of the postal privatization committee will submit an opinion paper at today's meeting. Under the current circumstances, am I correct in understanding that the issue of whether to grant approval will be left to the incoming government to decide?

A.

It is difficult to comment on that until I see the contents of the opinion paper. However, at the committee's previous meeting, the FSA explained the progress status of its examination. Therefore, I hope that the privatization committee will make an appropriate decision in light of the progress status of examination.

Q.

In relation to Japan Post, Chairman Nishimuro indicated that there are some inappropriate incidents which have not yet been made public. How will those incidents be dealt with? Chairman Nishimuro is leaning toward granting approval before they are made public. Don't you intend to disclose the details of those incidents?

A.

Do the incidents concern postal insurance or savings?

Q.

It is not clear which business field they concern.

A.

As in the case of the new education insurance service planned by Japan Post Insurance, for example, it is important to develop an adequate internal control system that prevents inappropriate incidents.

For the moment, I do not know whether those incidents concern postal insurance or savings. Japan Post Bank is applying for entirely new services, whereas Japan Post Insurance was applying for a revised education insurance service. Therefore, the situation is fundamentally different.

In addition, if there are inappropriate incidents that have not been made public, it is necessary to appropriately deal with them in accordance with laws and regulations.

Thank you very much.

(End)