ABSTRACT
The MOF has been regarded by the public as the most powerful and competent ministry among Japanese administrative organizations. It has monopolized the jurisdictions of taxation and budget compilation; it has therefore controlled both annual revenue and expenditure. Furthermore, through the budgetary process, it has played the role of arbitrator or coordinator between ministries’ policies (Brown Jr 1999: 161). As Peter Hartcher points out, the MOF has been regarded as ‘much more than an office of government’ and ‘In Japan, there is no institution with more power’ (Hartcher 1998: 2). In particular, the MOF had strictly controlled financial policies and institutions by monopolizing information, issuing directives (ts¥tatsu) and executing administrative guidance. Thus the MOF had effectively dealt with financial institutions that were in difficulties. For example, when the difficulties of the Yamaichi Securities Company were revealed in 1965, the MOF cooperated with the Bank of Japan and city banks that had close business relationships with the Yamaichi Securities Company and succeeded in restoring its business. Until 1993, the MOF had been proud that no financial institution had failed since the Second World War. However, the MOF was severely criticized for financial crises in the latter half of the 1990s. The process of liquidation of the J¥sen and the Long-Term Credit Bank of Japan (LTCBJ) was confused, and such confusion and delay of liquidation worsened the Japanese economy. In this chapter, I explain that such confusion was caused by the decline in the effectiveness of the issue settling system.
