In Japan, there exists a concentration of unsurpassed power which cannot be equaled by any other in the hands of the Ministry of Finance. The Minister of Finance, a cabinet member, is in charge of the ministry. This portfolio was at one point cited as the most powerful position in Japan and the world as well, due to previously Japan having extensive foreign exchange resources. However, now much of that power has gone to the governors of Bank of Japan because of Japan being the biggest and lowest global rate creditor.
A few of the powers of the Ministry of Finance are:
– annual budget draw up for the Japanese government subject to submission for approval to the legislative
– financial markets regulation
– Supervising tax collections
– management of deposit insurance scheme of the banking system
Ministry of Finance, Japan :
The Ministry of Finance in Japanese, is known as the Ministry of the big store house and exercises control over the national tax agency, the Bank of Japan (its central bank) as well as defense agency staffing. It is also responsible for publishing the Japanese trade statistics. Japan’s financial system is similar to that of other industrialized countries. It consists of a commercial banking system which extends business loans and also accepts deposits.
There are various government owned financial institutions which monetize the different sectors of the domestic economy. Government and corporate security underwriting, security market dealings and brokerage services are provided by security companies. The capital market aids private and public financing and remaining corporate ownership sales. The money market is not only a great tool to implement the Bank of Japan monetary policies but also a great source of liquidity.
Private banking sector in Japan
The private banking sector was paralleled by a collection of government financial institutions. The domestic economy and its various specialized sections saw promotion the Japanese Development Bank, Export Import Bank of Japan and various financial corporations such as the Housing loan Corporation. Funds were mobilized through insurance, annuities and savings through the 24,000 offices of the postal savings system. Commercial mortgage backed security viability and growth is backed by the CRE Finance Council of Japan. This council aids the government in comprehending Japanese CMBS to enable economic growth through long term sustainable financing support.
In Japan there were 64 smaller regional and 13 major banks. In the early 90s the world’s five largest banks in terms of assets, were Japanese. Japanese banks underwrite Euro-Yen bond issues and also lay stakes in the United States Treasury bond market. The late 80s saw more than 90% of the Japanese population having insurance. The Tokyo stock exchange became the largest exchange in the world in 1988. It had 124 member companies in 1990. The Nikkei is considered a benchmark even today across the world in the financial securities market.
The Hatoyama Initiative was announced in December 2009(commonly referenced as Fast-Start Financing), through which financial assistance (private and public ) was pledged to developing countries, in order to help address climate change issues to the tune of USD$15 billion. It comprised USD$4 billion in private finance and USD$11 billion in public finance. This scheme on Fast-Start Financing (FSF) replaced the erstwhile financing method of the government known as the Cool Earth Partnership which was active till 2010.
Japanese finance ministry has various bureaus for each industry rather than being concerned with individual investor protection. This is due to the practice of amakudari meaning descent from heaven where underpaid bureau staffs join those industries which were during tenure under their control, thus leading to fierce encroachment battles with other financial sectors.