They want to put a US-like cap on deposit insurance. Basically, about 100,000 max. on each account, no matter what type of account.
Try Japan Times' or Mainichi's searchable online archives. Basically, the US is leading, and has led, the agenda on liberalization regimes for the FIRE industries (now part of the ambitious 'liberalization of integrated, networked services'). Japan has mostly meekly followed since the late 1980s, even when it became clear said liberalization was the cause of the Asian meltdown 1997-8.
Two sources of distress in Japan are: 1. getting capital adequacy ratios up to 8%--the int'l standards-- and 2. dealing with the analysts who work for venture/vulture capital who will do everything in their discoursal power to keep them from achieving number 1.
>>What's a Japanese housewife to do? by:
tony_schwarz (45/M/bel air, md) 07/11/02 09:40
am Msg: 147249 of 147281 TOKYO, Jul 11, 2002
(Kyodo via COMTEX) -- Prime Minister Junichiro
Koizumi reiterated Thursday that the government
will impose a refund limit on ordinary and
checking-account bank deposits at failed banks
from next April, dismissing intensifying calls
for its postponement.<<
They've already gone ahead with limits on insurance on time deposits. The biggest effect is that local governments and companies diversified their banking. I think this meant moving money from the biggest local bank or the city bank (these city banks are the Japanese giants known abroad--Mizuho, Sumitomo, etc.), and putting it in local institutions as well--like JA, shinyou kinkou, roudou kumiai (these are all pretty much like credit unions and building societies). The MofF people are hoping that it will cause wealthy investors to get back into stocks. But I think most of them are deep into global bonds and can't find much of anything in a Nikkei-fund that appeals.
>>"We will implement the policy as scheduled.
There will be no change in the policy," Koizumi
told reporters at his office after meeting with
Financial Services Minister Hakuo Yanagisawa
there.<<
Why not , since the move on time deposits caused no panic. If anything, it just meant people took their nest eggs of 10 million yen (about 100,000 dollars) and broke it up into two 5 million yen eggs, or something like that. They might put one with the postal savings and the other with the strongest regional bank in their area, for example. Gov'ts and companies did the same.
>>His remarks came after key figures in the
ruling bloc and major business lobbies stepped
up calls to postpone the plan to impose a 10
million yen cap on guaranteeing ordinary and
checking-account bank deposits per person per
bank. Opponents claim abolition of a full
guarantee on the deposits could accelerate an
exodus of funds from small and medium-sized
banks.<<
I don't think so. It's the big banks that are the scariest and the most likely to be gone in a couple years. After the Mizuho bank machine debacle, that's even more apparent. Too big to be managed. The biggest question is what sort of privatization scheme goes forward for the public postal savings, since that is most likely where panicked depositors will put their money. They can cap the deposit insurance there, too, but so long as it is the postal savings, does anyone think it could default ?
>>But Yanagisawa also said that there should be
no radical changes in the basic principles of
Koizumi's structural reform program such as the
planned introduction of the refund cap. The
government abolished the blanket guarantee on
time deposits in April, imposing a limit of 10
million yen per person per bank for deposits at
failed banks.<<
One of the expressed goals is to eliminate 'moral hazard' with depositors. This is total bullshit, however. If I put my money in a bank, I'm loaning that money to them. It's my loan assets, it's the bank's liability. But they are required by law to make good on it. Certainly my claim is stronger than a stockholder's in the event of a bankruptcy (in an ideal world).
Avoidance of moral hazard belongs with stock holders, not depositors. Of course, that's not how it has worked out so far.
At least in the insurance sector. Prudential US pushed ('advised') Kyoei Life into becoming a stock company. It then became the controlling stock holder. It then pushed Kyoei into bankruptcy, sold off assets for profits, and handed a bill to policyholders--lower returns and stiff penalties if they cashed in their policies early. If the banks go to a 100,000 dollar cap on deposit insurance, I can see the same thing happening here when failed banks get taken over. So I guess the Japanese should get set to take 'moral hazard' up the rear end.
>>During the cabinet ministers' meeting, Nikai
and Secretary General Taku Yamasaki of the
Liberal Democratic Party, the core member of the
ruling coalition, said details of proposed tax
breaks in the second package of antideflation
measures should be clarified promptly.<<
What anti-deflation measures? They think talking about it and appeasing the US on 'structural reforms' is anti-deflationary. What a joke. A yen set at 140-150 yen to the dollar and swift kick into the rear end of the currency speculators and foreign venture cap fucks (which never capitalizes anything here anyway) would be the best anti-deflation measures I know of.
As the yen goes to 115 to the dollar, and exports become unprofitable, and domestic deflation continues, it's more, more, more of the same, same, same. Prediction: Japan will be firmly back in recession by Q4.
CJ
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