Excerpts from the Joint Press Conference given by SUZUKI Shunichi, Minister of Finance and Minister of State for Financial Services, and UEDA Kazuo, Governor of the Bank of Japan
(The second meeting of G20 Finance Ministers and Central Bank Governors under the Indian G20 Presidency)
(Thursday, April 13, 2023, 9:00 pm to 9:51 pm)
Touching on financial system stability, I called attention to the need to monitor the non-bank sector and cross-border spillover effects with heightened alertness. I also stressed the need for discussion toward enhancing the financial system in light of recent changes in the environment surrounding the financial system, such as rapid information sharing made possible by social media.
[Questions and answers:]
I have questions for the Minister. You said earlier that a Chair’s summary was issued at the February meeting. As Governor Ueda has just mentioned, the financial turmoil occurred in March. So, the IMF analyzed risks associated with it. Under these circumstances, the G20, an entity supposed to address economic crises, has not made any mention about the turmoil or shown any stance on it. What is your take on that? That is my first question. Let me ask you one more question, although this not about the Japanese government. What do you think is the background to the Chair not having issued his summary this time?
As a fact, no outcome document was issued. I heard India had no intention to issue a joint statement in the first place. This was the decision made by India, and I was not consulted in particular. I’m afraid I have no answer to your question. All I can say, though, is that as a member, I leave it to the decision of the Chair, who has a leadership role to play.
Issuing an outcome document is not an end in itself for the G20. This may hold true for the G7 as well. What matters is for the members to get together and have substantial and meaningful discussions. That is what is needed.
In that sense, we had substantial discussions on the series of financial crises in March. My understanding is that the meeting was meaningful not least because the participants were updated on this new issue among others.
I have questions for Minister Suzuki. You said earlier, in relation to the stability of the financial system, that you stressed the need for discussion toward a stronger financial system in light of changes in the environment surrounding the system, such as rapid sharing of information in the age of social media. How did participating members respond to this? What was discussed toward stabilizing the financial system? Could you elaborate on these issues?
I raised the issue in analytical discussions about how Silicon Valley Bank, or Signature Bank and Credit Suisse for that matter, had ended up like this. For one thing, the development of social media means that credit uncertainty like this will spread in an instant. Another factor also has something to do with speed – the speed of a bank run. In the past, depositors were able to withdraw their money only during business hours. They also had to wait in line in front of their banks. Now, internet banking allows them to take money out of their accounts all at once, anywhere, anytime, 24 hours a day. These are changes that we now have to deal with. The positive side to tackle these challenges is that financial authorities in member countries are successfully keeping pace with these changes and have taken firm action to secure liquidity in such a harsh environment.
Anyway, this kind of event did happen. I don’t have an answer as to what specific measures are in store. We must be well prepared, though.
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