Unofficial and Provisional Translation Readers are advised to refer to the original Japanese text before quoting from this document. It is important to transfer the financial functions of the failed financial institution promptly to an assuming institution, in order to minimize the negative impact on the depositors, the economy as a whole, and the financial system, caused by the failure. Even when prior preparation is incomplete, it is important to preserve certain financial function of the failed institution. Ensuring depositors' convenience DIC should be authorized to make advance payments Failed financial institutions should be allowed to repay deposits up to the insured amount DIC should be empowered to purchase deposits and other liabilities, as for the portion of deposits exceeding the insured amount Protection of liquid deposits Liquid deposits should be protected by some temporary special measures in order to avoid a disruptive impact on the economy as a whole and the financial system through interruption of payments, until the speedy resolution methods are well established and a variety of private payment services are innovated. In this case, however, measures to prevent moral hazard such as charging higher insurance premium for liquid deposits are necessary.
Rigorous procedures are necessary in such cases.
At present, the DIC is authorized to purchase only insured deposits and liabilities. This DIC's purchasing authority should be widened to some uninsured deposits and liabilities with certain conditions, including a requirement that the claims and creditors are clearly identifiable. Following the decision, the Ministry of Finance is preparing necessary legislation, which is planned to be submitted to the ordinary session of the Diet starting from January 2000.