11. Big Bang. the "Big Bang," they are undoubtedly talking about the deregulation 2 of the

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1 P Big Bang "Big Bang 1 " is the term used originally to describe the reform of Britain's financial system in the 1980s. Nowadays, however, when people talk about the "Big Bang," they are undoubtedly talking about the deregulation 2 of the financial systems in Japan. P70 Effective 3 April, 1998, and continuing through , revision 5 of the Foreign Exchange and Foreign Trade Control Law 6 calls for 7 two major reforms 8. First, under the previous system, businesses or individuals that wished to conduct financial transactions 9 with foreign institutions 10 had to obtain approval 11 from the Ministry of Finance (MOF) 12 prior to 13 the transaction. Under the new system, the Ministry of Finance requires a report of the 1 Big Bang... 2 deregulation... 3 Effective...=Being effective : The law becomes effective at midnight.. 4 Through ( ) ;( ) from 1900 through revision... 6 the Foreign Exchange and Foreign Trade Control Law... 7 calls for... 8 reform... 9 financial transaction foreign institution approval the Ministry of Finance (MOF) prior to..., (before): 1

2 transaction only after the deal 14 has been completed. The second reform abolishes the system of allowing only a few approved banks 15 to exchange currencies 16. These two reforms are designed to liberalize 17 or to open up 18 various financial markets to Japanese customers. For example, people are allowed to open accounts 19 in foreign banks and the overseas branches of Japanese banks, using yen or a foreign currency. In addition, it is likely that the number of outlets 20 for exchanging currency will increase. Many experts predict 21 that people will be able to change currencies at local convenience stores and at major train stations and airports. These reforms also open up the market for stock and bond investments 22 since people and businesses are allowed to buy securities 23 directly from foreign brokerage businesses 24 and banks. Officials at the Bank of Japan (BOJ) 25 and many other economists are P71 14 deal approved banks currencies liberalize open up open accounts outlets predict stock and bond investments securities brokerage businesses the Bank of Japan (BOJ)... 2

3 worried that these changes may set off 26 a "yen flood 27," a flow of money out of the country. Indeed, overseas investments are attractive alternatives 28 to the low interest rates 29 paid on deposits 30 in Japan and the expensive costs associated with stock investments. For example, all transfers of stock 31 in Japan are taxed 32, and the buyer 33 must also pay a high commission 34 to the broker 35. However, in London, the tax on stock transactions has been abolished, and commissions cost roughly only onetenth 36 of Japanese commission costs. Others argue that no such "flood" will occur because of the way Japanese people view 37 investments. Since over 90 percent of the really rich Japanese are land owners, they are likely to resist any investment that might pose a risk 38 to their principal holdings 39. Meanwhile, foreign banks and investment companies are gearing up 40 to compete in the Japanese market, and some Japanese banks and foreign banks are merging 41 as a 26 set off yen flood alternative interest rate on deposit transfers of stock tax buyer commission broker one-tenth... three-tenths view pose a risk principal holdings gearing up merge... 3

4 result of the "Big Bang." The final results will be interesting! 4

5 P72 Exercise 11-1: T-F Questions T F ( T ) 1. The term "Big Bang" refers to 42 the easing of constraints 43 and limits on financial deals. ( T ) 2. The two major reforms are concerned with governmental regulation and foreign currency exchange. ( F ) 3. Although the "Big Bang" may strongly affect businesses, it will have little impact on ordinary Japanese people. ( T ) 4. With the reforms, people are allowed to invest or deposit their money into overseas accounts. ( F ) 5. However, it is usually much more expensive to invest money overseas than it is in Japan. ( F ) 6. Japanese investors are not particularly worried about risks because most of their assets 44 are in land. ( T ) 7. Many Japanese financial companies are creating partnerships with foreign companies as a result of reform. 42 refer to constraint... on 44 asset... 5

6 Exercise 11-2: Vocabulary Build-up P The police asked him to ( describe ) the person he had seen. to give a picture 45 of something in words 2. The government has a plan to ( reform ) the tax system. to change to a better state or form 3. How long can they ( continue ) to fight each other? to go on without interruption as in some course or action 4. A bank clerk will advise us how to ( invest ) our money. to put up or spend (money) in hopes of making a profit Where did the railway accident ( occur ) to take place. 1. previous ( a ) a. following 2. foreign ( b ) b. domestic 3. major ( e ) c. establish 4. abolish ( c ) d. disagreeable 5. attractive ( d ) e. minor 45 give a picture making a profit... 6

7 P74 Exercise 11-3: Structure and Idiomatic Expressions 1. Prosperity is ( b ) peace. 2. This accident happened ( f ) her death. 3. It is ( e ) rain. 4. This situation ( c ) immediate action. 5. The rains ( h ) a mudslide 47 that killed 25 people. (a) abolishes (b) associated with (c) calls for (d) generally (e) likely to (f) prior to (g) reform (h) set off (i) subject to 47 mudslide... 7

8 Exercise 11-4: Basic Composition % Japan's trade surplus rose 23.1 percent to 14 trillion 97 billion yen in fiscal ,000 The Dow Jones industrial average of the New York Stock Exchange topped 10,000 dollars for the first time on March 16, The commission on stock investments is to be liberalized due to the deregulation of the financial system. 8