09 June 2009

Tanimoto - Japan’s contribution in response to the current crisis

The financial services industry is expected to correct the financial business model, Mr Tanimoto said. He warned against hastily raising minimum capital requirements and proposed to strengthen the risk capture at financial institutions.

Tatsuya Tanimoto, Japan’s Senior Vice Minister of Cabinet Office, underlined the need for global co-operation to overcome the crises, warning that protectionism will have a devastating impact.

 

With regard to crisis prevention and the re-design of financial regulation, Mr Tanimoto said the root causes lie in excesses in the financial sector alongside global imbalances.

 

“We are now at a phase where the pendulum must swing toward more focus on security”, he said. “The financial services industry is expected to correct the financial business model which deployed excessive leverage and opaque financial products in pursuit of short-term profits.”

 

However, Mr Tanimoto also warned against too-hasty implementation of medium-term measures as they could exacerbate the current situation and make crisis management even more difficult.

 

“We must avoid hastily raising the regulatory minimum level of capital”, he said. “Rather, we should focus more on strengthening the risk capture at financial institutions so that the capital level of each financial institution corresponds to the risks inherent in its business model.”

 

Full speech

 

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