New Year's Address from the Chairman

This year JBA is particularly focused on tackling the following two tasks.

The first task is to promote structural reform in the financial markets and further invigorate them, so that market participants may further enjoy their merits. This requires the freedom and discipline of banks. Banks need to provide convenient products/services through free competition and simultaneously create an environment in which customers can feel secure in their banking activities.

Ten years have passed since the Japanese Big Bang initiative was launched and triggered significant progress in deregulation and market reform. The series of deregulations concerning the separation of financial businesses comes to a close with removal of the ban on banks selling insurance products scheduled for the end of this year. The reforms implemented to date have separated sales from production in the financial business as evident in the bank agency system and securities intermediary business. Banks are required to endeavor to further enhance customer convenience through competition and cooperation across all financial business lines.

The ensuring of security and confidence vis-a-vis financial transactions and financial institutions on the other hand requires implementation of proper measures as stipulated under the Financial Instruments and Exchange Law to be enforced from this summer. Security and confidence also depend on a more sophisticated risk management system and strengthened internal controls as proposed by the Basel II．

JBA will continue to endeavor as a trade group to realize a secure banking environment for customers, including implementing measures to prevent financial crimes and reinforcing the functions of consumer relations offices.

The second task is to deal with public finance reform, which is now entering a critical phase.

The postal savings bank will be launched in October 2007. We have maintained that it is essential to reduce the business size and ensure a fair competitive condition with private financial institutions in the process up to complete privatization.

For entities providing policy finance, it is essential that whatever entities remain as providers of policy finance do so solely in a supplemental role to the private sector and institutions being privatized conduct business on a level playing field with other private financial institutions.

We will compete with those institutions on a fair playing field once they are completely privatized on both the "way in" and "way out" sides. In the transitional period, however, JBA will continue to express its opinion proactively so that distortions in competitive conditions and financial markets do not arise.

For the Japanese economy to maintain vigor for the medium-term and long-term period and enhance its competitive edge internationally, banks will support the economic activities of individuals/firms broadly by providing high value-added products and services.

I hope this year will witness a great leap forward for banks.