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

(Excerpt)

(Tuesday, February 2, 2016, 10:16 am to 10:25 am)

[Questions and answers:]

Q.

I have a question about the Bank of Japan’s negative interest rates. Since Friday the prices of bank stocks have dropped sharply, and although they’ve rebounded today, the investment environment has severely deteriorated in conjunction with the fall in market interest rates. So some are saying that investors are expressing concern about the future of bank operations. Minister, please tell me what you think the impact of negative interest rates will be and how you think that will affect the operations of banks.

A.

At least during the past 70 years, during the 71 years since the war, negative interest rates have never been introduced, so lots of things are going to be happening for the first time. It’s uncharted territory, so I understand that people are feeling uneasy, but at least excessive pressure isn’t being put on financial institutions. I think you have to consider that if you put excessive pressure on financial institutions, financial intermediary functions, banks acting as intermediaries in providing finance to companies, those sort of functions may be weakened.

So far we’ve seen plus 0.1% interest rates, and various rates, such as rates just above or below zero, plus/minus-zero interest rates, are being applied. That’s the nature of the measure, and the current situation in the Japanese economy is that financial institutions have money but there’s no demand for it. It’s not that there’s demand for money but no money available, so we’re going to make sure we keep that in mind, and the Bank of Japan is obviously monitoring the situation, too, and I think that we at the Financial Services Agency (FSA) must also carefully monitor each financial institution to see whether any of them are in such a situation.

Q.

So the FSA must carefully monitor the situation at banks. Is that what you mean?

A.

Well, we always do.

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