Press Conference by Ikko Nakatsuka, Minister for Financial Services

(Excerpt)

(Tuesday, December 25, 2012, from 10:31 a.m. to 10:45 a.m.)

[Questions & Answers]

Q.

Could you look back at and comment on the outgoing government’s policies, particularly in the field of financial administration, for which you are responsible?

What has been the greatest achievement, and what tasks have you failed to accomplish in the past three years and three months?

A.

I have the impression that various incidents have occurred in the past three years and three months. The Lehman Shock was a once-in-a-century incident and the Great East Japan Earthquake was a once-in-a-millennium disaster. The chances of two such incidents occurring simultaneously is once in 100,000 years. Such were the circumstances in which our government has navigated.

For my part, I have served as a minister for just under three months and have felt that serving as a minister may be a harder job than fighting an election campaign.

At the beginning of the past three years and three months, we faced a severe economic situation from the perspective of financial administration. We started off amid the impacts of the Lehman Shock and European fiscal and financial problems as I mentioned earlier. Regarding the facilitation of financing for small and medium-size enterprises, we started by enacting a new law. In a sense, that was a great challenge that required a change in the business model of financial institutions. The fact that the effects of this law are taking root may be seen as an achievement.

In addition, the fact that we have strictly and appropriately dealt with cases of financial irregularity such as the AIJ problem and insider trading cases related to public offerings may be seen as a great achievement.

Vigorous market activity is possible only if the fairness and transparency of the market are maintained, and in this respect, I hope that the Financial Services Agency (FSA) will continue to work hard.

Q.

I am Namikawa from Toyo Keizai.

You said that there have been various incidents, including insider trading cases related to public offerings, and that you have appropriately dealt with them. On the other hand, there are many pending issues. For example, the SME Financing Facilitation Act is scheduled to expire at the end of March. In relation to requests for tax system reform, the plan to introduce the Japanese version of ISA (tax exemption for dividend income and capital gains related to small-amount listed stock investments) is also pending and its prospects are uncertain. Among the pending issues, which is the most nagging one for you, as you have to step down before they are resolved?

A.

I regret to say that there are two nagging issues. One is an exit strategy related to the SME Financing Facilitation Act. It is inevitable that some borrowers cannot be turned around through financing support alone. Financing support buys time during which fundamental corporate turnaround must be carried out. Therefore, I hope that the incoming government will pursue an appropriate exit strategy.

The other nagging issue concerns the response to the insider trading cases and the AIJ problem. While I believe we have strictly dealt with cases of irregularities, legal amendments have to be made in the future to prevent the recurrence of similar problems. Advisory councils are holding debates, and I expect the FSA will work out its own approach. I believe it is essential to take effective recurrence prevention measures. These are the two most nagging issues for me, on which I hope my successor and the incoming government will work hard.

(End)