(Provisional translation)

Policy Statement by Taro Aso, Minister of Finance and Minister of State for Financial Services, at the Committee on Financial Affairs of the House of Councillors

November 20, 2018

(Introduction)

 I am Taro Aso, Minister of Finance and Minister of State for Financial Services. For starting this meeting of the committee, I would like to address a few words.

(Current state of the Japanese economy and basic approach to fiscal policies)

　Thanks to a lasting economic recovery, the Japanese Economy has steadily followed a path of overcoming deflation. From a mid- and long-term viewpoint, however, the decreasing birthrate and aging population is continuously a factor in restraining both economic revitalization and fiscal consolidation. To tackle with the greatest challenges of the decreasing birth rate and aging population, and realize sustainable economic growth, it is integral to enhance a virtuous cycle of growth and distribution.

　Taking these situations into account, we will accelerate and expand three pillars: overcoming deflation and revitalizing the economy, expenditure reforms, and revenue reforms, according to “the New Plan to Advance Economic and Fiscal Revitalization” under the “Basic Policy on Economic and Fiscal Management and Reform 2018.

　The budget for FY 2019 is the first one complied based upon “the New Plan to Advance Economic and Fiscal Revitalization.” We must realize the reforms across the overall expenditures following the plan, aiming for the primary surplus of the central and local governments by FY 2025.
 
  The consumption tax rate is scheduled to be increased to 10% on October 1, 2019 as stipulated by law. We will take all the possible measures in the economic and fiscal management such as introducing reduced tax rate schemes accompanying the tax hike as a consideration to low-income earners, and taking support measures to smooth out the consumption before and after the tax hike.

  At present, the supplementary budget for FY 2019 has been passed in order to take measures for restoration and reconstruction in areas affected by a series of disasters that occurred this year, installation of air conditioners mainly in public elementary and junior high schools, and rebuilding of block walls. We will strive to promptly implement the budget for the sufferers to lead a stable life as soon as possible.

 (Basic concepts on the financial regulatory policy)

　Next, I would like to elaborate on current financial regulatory policies.

　To secure a virtuous economic cycle, we will respond appropriately to challenges such as the acceleration of digitalization, and will continually strive to change the impression of the “Financial Services Agency” from the Financial Sanction Agency to the incubator of financial businesses, in line with the “Financial Services Policy: Assessments and Strategic Priorities” published this September.
　
　We will carefully monitor both domestic and international economic conditions and financial markets to maintain the long-term soundness of Japan’s financial system and to facilitate the financial intermediation amid the evolving financial environment. We will also communicate closely with the management teams of financial institutions on the appropriate planning and implementation of business strategies and on the practice of governance. In addition, we will step up our efforts to inspect and monitor financial institutions, taking into consideration the customer protection problem that occurred at Suruga Bank regarding loans for purchasing investment property.

　With the advent of the era of 100-year lifespans, we will work toward supporting the efforts of households to build stable assets over the course of their lives and will continue to promote the diffusion of the “Dollar-Cost Averaging NISA (TSUMITATE NISA)”, which is aimed at encouraging households to enroll in long-term, installment and diversified investments from small amounts. We will also encourage financial business operators to take initiatives toward customer-oriented business conduct and to discuss and deliberate on how to develop desirable financial services in the aging society.

  Furthermore, we will take appropriate measures to deal with virtual currency exchange services from the perspective of protecting users in light of recent issues related to crypto-assets and virtual currencies.

　Moreover, in terms of global policy agendas, we will continue to contribute to solving new challenges common at home and abroad, sharing the knowledge and information with other countries.

(Conclusion)

I am determined to continue, with your support, to do my best in policy management. I would appreciate understanding and cooperation of Chairman Nakanishi and all the other members of the committee.

(End)