[ Provisional Translation ]

Views on the Revision of the Bank of Japan Law

[ Summary / Full Text ]

September 17, 1996

The reform of the Japan's central bank system is considered an important element of reform of the financial system. It is an issue of great interest not just for the financial world but for the entire industrial world as well.

Upon examination with consideration of opinions in the industrial world and international trends, Keidanren (Japan Federation of Economic Organizations) has put together its opinions regarding the revision of the Bank of Japan Law as follows.

Needless to say, the reform of the financial system is not something that can be completed simply by revising the said Law. Keidanren will conduct further discussions in the future with particular regards to financial regulation.

  1. Viewpoint on the Revision of the Bank of Japan Law
    1. Closing of the gap between wartime law and actual conditions
    2. Securing of compatibility central bank systems of foreign countries

  2. Role of the Bank of Japan
    1. Achieving "price stabilization"
    2. Stabilizing the settlement system

  3. Bank of Japan's Independence, Accountability, and Reporting Obligations
    1. Ensuring legal independence (so as not to hinder the BOJ from executing its missions)
    2. Improvement of "transparency" of policies, strengthening accountability, and ensuring compatibility with the economic policies as a whole
      1. Establishment of a committee in the Diet for examining financial issues, periodical explanation of policy management by the Governor of the BOJ
      2. Ensuring compatibility with economic policies as a whole with reference to overseas regulations

  4. Supreme Decision-Making Body
    1. The Policy Board should be abolished, and a supreme decision-making body should be established made up of the Governor, other executive directors and people in neutral positions.
    2. Improvement of "transparency" and strengthening of "accountability"
      1. Before assuming office, the members of the supreme decision-making body should explain their opinions regarding financial policies before the Diet committee, and be appointed by the Cabinet based on approval by the Diet.
      2. What is discussed by the supreme decision-making body should be made public.

  5. Examination
    1. In order to stabilize the settlement system, examination by the BOJ should be drafted into law .
    2. To eliminate redundancy between BOJ and administrative examination and to ensure effective and efficient examination, differentiation of examination and examination intervals according to the rating of the financial institution, coordination and cooperation with administrative examination, and sharing of data should be promoted.

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