Financial institutions will be supervised by a new, beefed-up watchdog after June 1998.
Government officials said August 27 that 51 new inspectors will augment the 373 staff members to be brought over from the Finance Ministry for the new body, which is tentatively called the financial supervision agency.
In a report to Liberal Democratic Party panels on finance and affairs of the Prime Minister’s Office, the government said the new agency’s powers would be fortified with the increase in staff. The body is to be headed by a director general whose status will equal that of a vice-minister, and a deputy director general. A secretariat staff of 62 will handle general affairs.
In all, 186 people will work in the agency’s department responsible for inspecting financial firms as 36 new staff members will be added to the 150 from the Finance Ministry. Sixty-eight staff members will watch over the operations of banks, brokerages, insurance firms and other financial institutions. Fifteen new staff members will join the 91 to be shifted to the agency’s secretariat of the Securities and Exchange Surveillance Commission, the nation’s securities watchdog, bringing the total there to 106.
A section of the new body is also planned to study the creation of a Financial Intelligence Unit in Japan. Such a unit would be responsible for investigating illegal activities such as money laundering.
The Prime Minister’s Office is to make a budget request of roughly 6.8 billion yen for fiscal 1998 to cover the costs of establishing the new agency. The decision to establish the body came after a string of failures at financial institutions that left depositors concerned over the stability of the nation’s financial system and the public increasingly critical of the Finance Ministry’s wide range of powers.