On September 29, 1999, Mr. Tetsuya Katada, Keidanren's Vice Chairman and Chairman of KOMATSU, held a press conference to present Keidanren's proposal to strengthen Japan's financial system.
On September 29, 1999, Mr. Tetsuya Katada, Keidanren's Vice Chairman and Chairman of KOMATSU, held a press conference to present Keidanren's proposal to strengthen Japan's financial system.
The followings are major points of Mr. Katada's statement at the conference.
Keidanren urges the government to end the temporary measure that guarantees the full amount of bank deposits in the case of a bank failure. Instead, the so-called payoff system, which provide such guarantees to a maximum of 10 million yen per depositor, should be reapplied from April, 2001.
As a condition of the reapplication of the payoff system, Keidanren urges the government to prepare a financial safety net to effectively deal with a possible failure of a bank. The safety net includes the loss-sharing rule and the so-called purchase and assumption(P&A) technique that is widely used in the U.S. The P&A is that, if a bank goes bankrupt, a caretaker financial institution take over only deposits insured by the Deposit Insurance Corporation and healthy loans while administrators are sent to the failed bank by the government.
