Better Regulation - improving the quality of financial regulation -

Efforts in the areas other than “Rules-based and principles-based supervisory approaches”

The second pillar: “Prompt and effective responses to high-priority issues” (risk-focused, forward-looking approach)

This approach requires the recognition of the areas where potential risks exist in the financial system as quickly as possible, and the effective allocation of our resources to these areas so as to address such significant issues.

  1. Exposures of Japanese deposit-taking institutions to subprime-related products
  2. ''The Global Financial Market Turmoil and its Policy Implications'' Speech by Takafumi Sato, Commissioner of the Financial Services Agency at the EU Financial Counsellors Meeting, Tokyo (December 6, 2007)

The third pillar: “Encouraging voluntary efforts by financial institutions, and placing greater emphasis on incentives for them”

Our approach toward more incentive-compatibility and greater emphasis on voluntary efforts has already been incorporated to a significant extent in our regulatory framework.

  1. Financial Inspection Rating System (Put into full effect in January 2008)
  2. Basel II, which was implemented in Japan ahead of most of other countries. (In the fiscal year ended in March 2007)

The fourth pillar: “Improving the transparency and predictability of regulatory actions”

The FSA has compiled and published its inspection manuals and supervisory guidelines, which clarify checkpoints in inspection and supervision. The inspection and supervisory policies are also published for each operational year. In addition, we have published criteria for our administrative actions, upgraded our No Action Letter System, and posted Q & As about the interpretation of rules.

Overview of the institutional, regulatory, and supervisory framework - Toward further improvement in the transparency of regulatory actions -

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