The government may delay the planned April 2003 introduction of a 10 million yen refund cap on demand deposits for more than one year, Chief Cabinet Secretary Yasuo Fukuda indicated Thursday.
“We have not ruled out the possibility of reversing our policy,” Fukuda told a news conference, suggesting a formal decision will be made later in the month.
Fukuda’s remarks follow media reports that Financial Services Minister Heizo Takenaka and top executives of the ruling Liberal Democratic Party agreed Wednesday to postpone the deposit protection guarantee cap for one to two years.
Asked to comment, Prime Minister Junichiro Koizumi told reporters he is waiting for a report from Takenaka on the issue.
Asked if the government is seeking to reverse its policy, Koizumi replied, “We are considering measures that will accelerate economic structural reforms.”
Takenaka, who also serves as economic and fiscal policy minister, reportedly believes imposing the cap on all demand deposits except those for account settlements amid the public’s lingering concerns over the stability of the nation’s financial system will cause turmoil.
Some LDP members want the so-called pay-off system put off for one year. Some are even calling for a two-year postponement until the end of fiscal 2004, the deadline set by the government for mending the nation’s bad-loan problem.
The Financial Services Agency has been considering postponing the refund limit for five months until next September to enable financial institutions to smoothly develop computer systems for a new settlement account that will be permanently and fully protected by the government.
The FSA plans to exempt the new settlement-specific account carrying no interest and checking accounts from the refund limit when it is imposed on demand deposits.
Takenaka has said since assuming the post as top financial regulator Monday that the ongoing discussion on introducing the refund cap “has been difficult to digest.”
Issues surrounding the refund limit will be discussed by a project team consisting of senior FSA officials and private-sector experts that was launched earlier in the day.
Devising measures on the acceleration of the disposal of nonperforming loans will also top the agenda for the project team.