Statement at the Tokyo Symposium: Regulatory Reform Session Akira Kojima Deputy-Chief Editorial Writer　Nihon Keizai Shimbun　 1.Three Patterns of Regulation 　A. Legislative and explicit regulations (public regulation) 　B. Discretionary regulations implemented through administrative guidance (public regulation) 　C. Regulations in the form of bisiness practices 　Although there is certainly a problem with A., in Japan, problems exist especially with B. and C., and specifically, there are many unclear regulations stemming from B. which suppress the dynamism of Japan's future activity. 　In terms of tax burden and the scale of central and local government fiscal spending, the Japanese Government is, relatively, not a big government. However,unclear discretionary administrative guidance regulates Japanese society, makingfor a heavy government. 　## Discretionary Administrative Guidance Which Has Hollowed Out the Financial Sector and Weakened Competitiveness, and Moral Hazards of the Financial Sector 　The type of administrative failure which was seen in the jusen (Housing and Loan Corporation) incident demonstrated the dysfunctionality of the Ministry of Finance in the bank and financial institution administration sector, as well as the fact that the administrative guidance method itself was the fundamental rootcause of the jusen problem. The administration of financial institutions in a so-called "armored escort" or "convoy method" is no longer effective for a mature Japanese economy. This type of administrative method was effective when Japan was in a "catch-up" phase or when it was still possible to consider the Japanesefinancial industry solely from a domestic perspective. However, the Cold War ended and an Age of Global Megacompetition began, and as Japan tried to shift into a post-catch-up era, that system lost its qppropriateness and legitimacy. The subsequent hollowing out of the financial sector was the offspring of that phenomenon. 　As the world's largest net creditor nation, what a huge stockpile of savings, Japan has a financial industry which holds an extremely strong position in the world context. Still, no single bank has been able to establish itself as an A- ranked credit institution in international markets. As a result, all financial institutions in the international market are forced to pay a "Japan premium" through regulations which are systemically scandalous. These Japan premiums are both an issue for individual financial institutions and a symbol of the systemicfatigue that pervades the Japanese financial administration and financial systems. The expulsion of Daiwa Bank from the New York market indicates that the Jap anese financial administration and financial systems have lost their compatibil-ity with global standards a systemic scandal which cannot be ignored. 　The "armored escort" approach to financial administration creates a situation in which sufficient profit can be secured without substantial effort (excess profit) by relatively strong financial institutions (Daiwa Bank in particular), which results in a moral hazard in which an insufficient level of effort is madeto ensure efficient management. The overall state of financial institutions is that there is no true competition. The problem is that they don't have to compete. 　## The Importance of Information Disclosure and a System of Personal Responsi- bility 　In order to create suffficient market functions, there must be a healthy market.The following three conditions must be met by a healthy market:(1) ease of new market entry, (2) ease of withdrawal, and (3) fair access to sufficient information by all participants in the market. The disclosure of information is a prerequisite for rational decisions by market participants. Responsibility does not appear without information and au- thority. It is only possible to expect self-responsibility once sufficient information is disclosed. In the current situation, information is disclosed to the administrative au thorities on a compulsory basis. However, it is not disclosed to the market, which needs it. 　## Problems with Self-Regulation (Business Practices) Carried Out by Industry Itself 　ATM (automatic teller machines) used in the financial sector are a good example. 　## Reform of Competition in an Age of Global Competition and Issues Facing Japan. ## The Price of Success Professor Drucker's critique 　## Sunset Methods Used in Promoting Reform ## Is Market Failure Policy Failure? 　There is a need to investigate the situation with this perspective in mind. Furthermore, the real moral hazard present in public institutions is worsening.