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On March 12, DPJ Diet member Tsutomu Okubo asked questions regarding the Bank of Japan’s fiscal policy and reform of government-related financial institutions.
Okubo started by commenting on the response to the economic crisis, saying, “It is necessary to increase our presence in line with our economic contributions.” He introduced coverage of the issue in the foreign press, and expressed the opinion that the problem is not how much money to spend on overseas trips taken by Prime Minister Aso and by Minister of Finance, and Minister of State for Economic and Fiscal Policy Yosano to the G20 summit meeting, but the question of “what we can do” and “what [message] we can transmit to the world”.
Okubo added, “Today, the Nikkei Index hit its lowest level since the bubble burst. At such a time we should be thinking seriously about ending the zero interest policy and about quantitative monetary easing.” He called on the authorities to actively consider increasing the amount of money for outright purchases of government bonds. Bank of Japan Governor Shirakawa explained the Bank’s fiscal policy and stated that he accepted the mission of stabilizing prices and the financial system and would work to that end.
Okubo went on to state, “In response to the policy of increasing dividends and raising share prices, you should consider policies which would distribute corporate profits to the workers,” expressing the opinion that the financial products trading law and corporate law should be revised. He asked Minister Yosano whether he thought that the privatization of government-related financial institutions had gone too far under the Koizumi reforms.
Yosano answered, “I believe that a few more legal provisions, such as those relating to crisis response management, should have been put properly in place. But I didn’t mean to say that I felt privatization itself had been a failure.” He acknowledged that the reforms of government-related financial institutions had been carried out under the premise that the global economy would continue to grow unabated, and that the government had been unable to predict the simultaneous global depression, and the huge tremors that had shaken the US and European financial systems, commenting, “On reflection, [our response] was insufficient.”
In response, Okubo said that the simultaneous global recession was down to the failure of the markets, and that it was the nation’s responsibility to intervene in the markets and act as a complement where necessary. He emphasized that if genuine crisis management was to be carried out speed was of the essence, and said that the time had come to return the Japan Bank for International Cooperation and the Development Bank of Japan to government control and stop selling their shares.
Yosano acknowledged that the necessity, in any era, of domestic fiscal policies directed toward small and medium sized businesses on the one hand, while on the other expressing the opinion that the basic problem was whether the JBIC’s activities of trade financing and of financing corporations engaged in overseas activities should be placed on a par with domestic finance. He added, “I am aware that the DPJ has made many proposals. I would like to discuss them thoroughly in the Diet and in cross-party forums.”
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