Press Conference by Taro Aso, Deputy Prime Minister, Minister of Finance, and Minister of State for Financial Services

(Excerpt)

(Tuesday, November 10, 2015, 8:37 am to 8:42 am)

[Questions and answers:]

Q.

Regarding international financial regulation, yesterday the Financial Stability Board (FSB) issued the final Total Loss-Absorbing Capacity (TLAC) standard for global systemically important banks (G-SIBs) in the event of their failure. Under this standard, the TLAC must be 16% of risk-weighted assets (RWA) by 2019 and 18% by 2022. Megabanks in Japan will be subject to the standard. Minister, please tell me your views.

A.

On November 9th, the Financial Stability Board issued its final report on the so-called TLAC rules, an international framework for improving loss-absorbing capacity in the event of the failure of so-called G-SIBs, global systemically important banks. The report is in line with the agreement reached at the G20 Brisbane summit held in November last year in Australia, and we welcome this issuance of the report. The content of the standard offers a balance between meeting the need for G-SIBs to provide loss-absorbing capacity and reflecting differences between countries in terms of market environment, procedures for dealing with bank failures, the business models of financial institutions, and so on. In the case of Japan, we have a deposit insurance system, so taking that into account, for example, 2.5% in the case of 16% and 3.5% in the case of 18% to reflect the capacity provided by the system, so given things like that, we feel it’s fairly appropriate.

Q.

Related to that, the public consultation policy proposals released in November last year gave a range for TLAC of 16% to 20%, but the range has now been set in the bottom of half of that, at 16% and 18%. Does this decision reflect efforts made by the Japanese authorities?

A.

I don’t know the details of the negotiations process. But regarding the result, I think a big reason is that the international financial situation has become a bit more stable compared to how it was in those days.