Chairman's Comment on Enactment of the Law Promoting Administrative Reform

On May 26, the Law Promoting Administrative Reform passed the Diet and the JBA Chairman issued the following comments on the same day.

The policy finance reforms deal with "out" of government finance, as opposed to privatization of the postal savings that deals with the "in," and are vital for shifting the flow of funds from the public to the private sector. JBA has maintained that the function of policy finance must be reviewed with regard to the needs of the times and their role should be limited to the minimum necessary, both in scale and means, ? essentially leaving what the private sector can do to the private sector.

The newly enacted Law Promoting Administrative Reform stipulates that the policy finance institution to be established in fiscal 2008 principally supplement private financial institutions (restricting its business to the necessary minimum), and that a system for monitoring and evaluating business conditions be organized to ensure that the necessity of each business is reviewed and outstanding loans are continually reduced. It also stipulates that the Shoko Chukin Bank and the Development Bank of Japan are to be completely privatized by selling all government-owned shares within 5 to 7 years after 2008. We appreciate that these stipulations will serve as the fundamental framework for promoting steady policy finance reforms.

The details of each institution will now be worked out and preparations for the new system started. We strongly hope that the maxim "Leave to the private sector what the private sector can do" will be adhered to in this process and that a level playing field between the privatized institutions and existing private financial institutions be ensured by the new third party monitoring body.