The government formally kicked off preparations Jan. 9 for setting up a new state agency to inspect and supervise financial institutions independent from the Finance Ministry. It set a self-imposed target to draw up necessary bills by mid-March.At the first meeting of the government’s preparatory committee for the new agency, Seiroku Kajiyama, chief Cabinet secretary and committee head, instructed members to submit bills to the Diet by March 11, the deadline for items relevant to budget bills for fiscal 1997. The next ordinary Diet session is to start Jan. 20. Kajiyama said the creation of the new agency is one of the most important jobs for the present government under Prime Minister Ryutaro Hashimoto, adding that this will serve as a symbolic case to test the prime minister’s determination to implement administrative reforms.Vice Finance Minister Tadashi Ogawa responded to Kajiyama’s instruction by saying that committee members will “make utmost efforts” to comply. The committee consists of administrative vice ministers from concerned ministries.The preparatory committee was established last month in line with an agreement between the ruling Liberal Democratic Party and its two smaller allies — the Social Democratic Party and New Party Sakigake. Under the agreement, the new watchdog body will be set up under the Prime Minister’s Office during fiscal 1998. The agency is intended to reduce the power of the Finance Ministry, which is currently in charge of both fiscal and financial administration.But the new agency will not completely deprive the Finance Ministry of its authority over financial administration, since matters related to financial policy planning and international finance will remain in the hands of the ministry. The independency of the new body from the Finance Ministry is also being questioned because the exchange of staffers between the new body and the ministry will be allowed.