Press Conference by SUZUKI Shunichi, Minister of Finance and Minister of State for Financial Services

(Excerpt)

(Tuesday, March 14, 2023, 9:36 am to 9:43 am)
 

[Opening remarks:]

Today the Cabinet has decided to submit the two bills drafted by the Financial Services Agency to the Diet.
The Kishida Cabinet gives priority to promoting a shift from savings to investment and generating a virtuous cycle of economic growth and increases in asset income. Especially for this year, which is the first year of realizing the Doubling Asset-Based Income Plan, we will foster measures to improve the environment for the successful implementation of the plan.
The two bills are intended to contribute to the improvement of the environment by mandating financial institutions and corporate pension funds to perform their duties in the best interest of customers, establishing an organization to foster financial and economic education for greater financial literacy among the general public, and by promoting measures to increase the efficiency of the domestic capital market and revitalize it toward creating an even more attractive market in Japan.
Also, concerning quarterly securities reports, the legal obligations will be lifted to make disclosures uniformly conform to the rules of stock exchanges for higher efficiency.
I hope that the bills will be deliberated by the Diet as soon as possible.

[Questions and answers:]

Q.

In the United States, Silicon Valley Bank and Signature Bank collapsed in succession within a period of several days. The factors contributing to the collapses are said to include increased unrealized losses caused by the Fed’s interest rate hikes and runs on deposits. Please share with us the results of the analysis made by the Japanese government about the issue and what influence the government thinks it will exert over financial markets, the domestic financial system and the future monetary policies to be adopted by the Bank of Japan.

A.

We are not in any position to know the details of the management situations of individual banks in the United States and are now collecting relevant information. However, Silicon Valley Bank, as was pointed out, collapsed due to cash flow problems, which were caused by its deposit structure. With a large proportion of its depositors being large corporate customers, the bank was prone to large outflows of funds. In addition to facing a rapid outflow of deposits, the bank posted a loss on the sale of bonds it was holding. Signature Bank likewise depended too much on large corporate customers for deposits, and due to the collapse of Silicon Valley Bank, Signature Bank also faced a rapid withdrawal of deposits by its customers. As for the impact on financial markets and the financial system, it is pointed out that risk avoidance measures are beginning to be taken by participants in financial markets, but US authorities are promptly taking actions to prevent financial uncertainty from expanding outward. For Japanese financial institutions, generally speaking they maintain sufficient liquidity position and have an adequate capital base, and so we evaluate the domestic financial system as remaining stable in its entirety. At present, we therefore think that the collapses of the US banks will not have a major impact on the stability of the Japanese financial system. At any rate, however, the Financial Services Agency needs to carefully monitor both domestic and international economic trends and financial market trends and the influence exerted by them over Japanese financial institutions. As for the monetary policy by the Bank of Japan, measures will be implemented in consideration of a range of factors, including the situation in financial markets. However, the specific measures to be taken by the Bank of Japan should be decided by the Bank at its discretion, and so I would refrain from making any comments about the impact of the issue on the Bank’s policies.

Q.

Let me ask questions about financial education. Such education has been promoted under the leadership of the Central Council for Financial Services Information and companies in the private sector. Why has the government decided to create a new organization for education and to implement relevant measures as a national initiative?

A.

The Doubling Asset-Based Income Plan focuses on seven key issues, one of which is the importance of financial and economic education.
As you pointed out, the Central Council established within the Bank of Japan has been leading measures for such education, but we plan to transfer the educational roles fulfilled by the Council to the newly established organization, which will implement more substantial measures for financial education, taking over the functions played by multiple entities from different standpoints toward providing the education in a more integrated manner.
As described in one of the bills for which the Cabinet made the decision today, we plan to further enhance financial education.