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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.”