The Committee stressed the urgency of reforming the financial intermediary function of the Japanese banking sector, deemed to have relied on credit security based on collateral. It is also calling for a more proactive role when it comes to international rule-making.
Based on a number of sessions held on what Japan's financial system should be like in the future in light of the global financial crisis, the Roundtable Committee on Fundamental Issues of the Financial System Council (Roundtable Committee) has published a report.
'It is urgent to reform the financial intermediary function of the banking sector, which is deemed to have relied on credit security based on collateral', the Roundtable Committee - composed of academic experts from major Japanese universities and research institutes - finds, noting that it is desirable that banks will aim for a business model of supporting value creation by companies.
Although supporting to enhance the regulation and supervision that focus on the interconnectedness among financial institutions and markets, the Roundtable Committee warns against the strengthening of regulation to a point when it will produce 'an excessive impact on the economies'. A gradualist, pragmatic approach is therefore warranted, the Committee proposes.
Japan should also play a more active role when it comes to contribute to international rules, the Committee recommends. For example, regarding emissions trading, it is important for Japan to make active contribution to the establishment of international rules, accounting standards and monitoring systems in order to ensure the appropriateness and transparency of transactions, while paying due attention to the impacts on economic activities.
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