Japan's Ministry of Finance

Japan's Ministry of Finance

The ¥300 trillion in the Trust Fund Bureau - which includes about ¥100 trillion in public pension funds - is managed by the powerful Ministry of Finance.

The Finance Ministry has more powers than the US Treasury Department. This is because the MoF concentrates many different functions into a single ministry.

For example, in the US, the Securities and Exchange Commission monitors securities markets, the IRS collects taxes, and several agencies watch banks.

In Japan all of this is done by different bureaus of the Ministry of Finance. However the Finance Ministry does not control Postal Savings and this leads to friction between the MoF and the Ministry of Posts and Telecommunications over Postal Savings policy.

Nevertheless the MoF regulates almost everything else, and it rules with an overly protective hand. For example, in the United States, companies do not need to obtain SEC approval before they can issue shares. Firms must meet SEC disclosure requirements, but after that it's up to the market to decide if it wants to buy the securities or not.

In Japan the Ministry of Finance feels a need to protect the market, so MoF approval is needed for everything. This attitude lead to the virtual ban on new equity issues in Japan for three years after the 1990 market crash.

In spite of its all-encompassing powers and protective nature, the MoF is severely understaffed in many areas. The MoF's Securities Bureau has fewer than 150 employees. By contrast, the SEC in New York has a staff of 2,000.