Make the Japanese financial markets flexible and diverse

HIGUCHI Hirotaro
Vice Chairman, Keidanren

Amid the ongoing globalization, Japan's financial markets have yet to meet the needs of the times. Foreign financial institutions in Japan have said in a survey that the Japanese financial markets have not yet been fully liberalized, citing arcane regulations, weak anti-trust enforcement, taxes and entry costs. The survey was conducted by the "International Financial Information Center" in October, 1995.

Something has to be done to curb the financial exodus from Japan. If we can't stem the tide, that will affect the development of new businesses and the operations of the existing companies.

What is needed is to make the Japanese financial markets flexible and diverse enough to satisfy the global standards. And it means convenience, efficiency and transparency.

And to achieve the goal, my suggestions are:

1. Liberalization and deregulation should cover financial businesses, costs of entry into the capital markets and entry procedures under the Foreign Exchange Law.

2. The country's administrative policy should be shifted from regulation-oriented to market-oriented.

3. The tax system on finance and securities should be revised, while the short-term financial market should be established.

4. The growth of public financial institutions should be held in check to encourage fair and open competition among private institutions.

I am convinced that Japan will revive as one of the "Big Three" financial centers in the world in the near future.