Date of resolution: 10:30 a.m. to 11:30 a.m., March 24, 2014 (Monday)
The deposit insurance premium rates will be revised as follows:
|(1)||The deposit insurance premium rates applicable from April 1, 2014, will be as follows:
|(2)||Based on the fact that a situation “where it is anticipated that a sharp decline in prices in domestic and international financial markets or other types of rapid deterioration of financial markets will adversely affect the financial position of the DICJ” did not arise during FY2013, if during FY2014 there is no (a) insurance contingency (Article 49, paragraph (2), items (ⅰ) and (ⅱ) of the Deposit Insurance Act); (b) order for a financial administrator to manage the business and properties of a failed financial institution (Article 74, paragraph (1) or (2) of said Act); or (c) decision by the Prime Minister to take measures stipulated in Article 102, paragraph (1), items (ⅱ) or (ⅲ) of said Act, the difference between the premiums calculated using the rates specified in (1) above and the premiums calculated using the rates below will be calculated and refunds equivalent in amount to the difference will be provided with no interest added without delay at the end of the relevant fiscal year or later subject to approval from the Prime Minister and the Minister of Finance despite (1) above:
As for the background to the changes in insurance premium rates, at a Policy Board meeting in March 2012, discussion was held on the framework for setting deposit insurance premium rates for the following three years (FY2012 to FY2014) and rates in the medium to long term. Based on this framework, it was determined that while the effective premium rate of 0.084% would be maintained in FY2012 and 2013, the DICJ would refund an amount of funds equivalent to 0.014% unless a failure of a financial institution participating in the deposit insurance system occurred during the relevant fiscal year. This framework also requires the following with regard to the setting of deposit insurance premium rates in the medium to long term: “Liability reserves of the DICJ General Account will basically be set aside for approximately ten years from FY2012 to such a level that the deficit experienced by the DICJ in the past will not occur again. The principles for setting premium rates will be specifically discussed while taking into consideration the status of the reserves and various domestic and international factors.”
Below, the various factors that should be taken into consideration when determining the deposit insurance premium rates in fiscal 2014, the third year under this framework, will be examined.
As for its finances, the DICJ continued to be in a state of deficit with regard to liability reserves after the deficit amount peaked at 4 trillion yen in FY2002, before returning to a state of surplus in FY2010. If a failure of financial institution does not occur in FY2013, making it necessary to refund deposit insurance premiums, liability reserves are expected to total approximately 1.7 trillion yen at the end of the fiscal year. When we look at the economic conditions and developments in the financial market as well as the condition of the financial system in FY2013, we may conclude that a situation “where it is anticipated that a sharp decline in prices in domestic and international financial markets or other types of rapid deterioration of financial markets will adversely affect the financial position of the DICJ” did not arise during FY2013.
As for the situations in Japan and abroad, while Japan’s financial system remains stable, it is still necessary to keep a careful watch on how the European debt problem will develop although concerns over it are receding. Abroad, efforts to expand funds for deposit insurance systems are continuing, not only in the United States but also in Europe, Asia and other regions, in order to ensure the stability of the financial system and protect depositors.
In light of these circumstances and if the following points are taken into consideration, with regard to the deposit insurance premium rates in FY2014, it is deemed to be appropriate to maintain a pace of liability reserve buildup similar to the pace in FY2012 and 2013 from the perspective of keeping the deposit insurance system robust as the core of the financial system and thereby securing domestic and foreign confidence in Japan’s financial system: (ⅰ) a framework for the following three years (FY2012 to FY2014) was established when the deposit insurance premium rates in FY2012 were determined; (ⅱ) during discussions on how the deposit insurance premium rates should be set in the medium to long term, a consensus has been formed that liability reserves should continue to be built up in FY2015 and beyond; and (ⅲ) continuous efforts to expand funds for deposit insurance systems are under way in other countries.
Therefore, it was determined that (1) the proposed effective deposit insurance premium rate in FY2014 will be 0.084% and (2) unless a failure of a financial institution participating in the deposit insurance system occurs during FY2014, the DICJ will refund an amount of funds equivalent to 0.014% without any delay at the end of the fiscal year or later while it will provide no refund if such a failure occurs.
Regarding the difference in premium rates between deposits for payment and settlement purposes and general deposits, etc., it was determined that the principle of ensuring an equal premium burden for each yen of insured deposits will be maintained. Consequently, based on the trend of eligible deposits, etc., the premium rates for the deposits (for payment and settlement purposes and general deposits, etc.) applicable in FY2014 were calculated.
Regarding how deposit insurance premium rates should be set in the medium to long term, namely, in fiscal 2015 and beyond ― although this is not an agenda item for this meeting ― the DICJ’s policy is to establish a forum of discussion where relevant parties can adequately express opinions after the start of FY2014 based on the concept indicated in the abovementioned framework.
(Unit: ¥ billion)
|Account||Total amount of revenue and expense budget||Forecast of financial condition|
|Revenue budget||Expense budget||Profit in FY2014
(“-” indicates loss)/ provision for liability reserves
|Liability reserve surplus at the end of FY2014(“-” indicates deficit)|
|Crisis Management Account||1.8||270.6||0.6||330.9|
|Financial Revitalization Account||1,365.5||1,362.6||-7.2||-255.4|
|Early Strengthening Account||296.2||290.3||6.9||1,596.0|
|Financial Functions Strengthening Account||24,012.7||24,108.4||9.7||24.9|
|Damage Recovery Distribution Account||0.9||0.9||-0.01446||-0.07830|
|Regional Economy Vitalization Corporation Account||0.0003||0.00671||-0.00641||-0.02742|
|Revitalizing Earthquake-Affected Business Account||0.0003||0.00097||-0.00067||-0.00179|