I am FUKUTOME Akihiro of Sumitomo Mitsui Banking Corporation.
It is my honor to succeed Mr. KATO as the JBA Chairperson, and I humbly ask for the support of all present as I undertake the crucial duties of this role.
First of all, I would like to express my deepest condolences and sympathies to the victims of the 2024 Noto Peninsula Earthquake, as well as to all those affected.
The JBA has encouraged our member banks to offer a flexible response to withdrawals and loans, and we will continue to do its utmost to support those affected by the earthquake so that they can return to their daily lives as soon as possible.
Upon assuming my office, I would like to take this opportunity to express my sincere gratitude to the former Chairperson, Mr. KATO.
Looking back at the last fiscal year, there were positive signs for Japan, with wage increases in 2024 Shunto exceeding those of the previous year, and the Nikkei Stock Average reaching an all-time high for the first time in 34 years. However, there were unforeseen events, such as the Noto Peninsula Earthquake and the failure of the Zengin System.
I will mention the Zengin System later, but first I would like to sincerely apologize for any inconveniences caused to our customers and others, and to take over our commitment to prevent a recurrence and to ensure a stable operation of the Zengin System from Mr. KATO.
Mr. KATO has dealt with these crises and led the banking industry with his bright nature and brilliant leadership. I would like to express my sincere respect and gratitude for his efforts.
Looking at the environment surrounding the banking industry, there are many events that require attention. These include the Noto Peninsula Earthquake, geopolitical instability such as tensions in the Middle East, and the slowdown of the Chinese economy. We recognize that we cannot afford to relax in the current business environment.
However, there are signs of budding toward a virtuous cycle of "wages, consumption and corporate performance" in the Japanese economy.
A paradigm shift is taking place everywhere, including the Bank of Japan's recent lifting of its negative interest rate policy, rising prices and interest rates, significant wage increases, and Green Transformation. Japan is at the very tipping point on its way out of the "three lost decades."
Based on this recognition of the environment, my goal for this year is to contribute to the establishment of a virtuous cycle in the Japanese economy amidst the progress of the paradigm shift. Specifically, the following three will be the pillars of our activities this year.
The first pillar is "encouraging a paradigm shift towards Japan's regrowth." The next few years, including this one, will be crucial for nurturing the seeds of the virtuous cycle and establishing it to emerge from "the three lost decades."
We will support the paradigm shift and the chain of the virtuous cycle that are advancing toward the regrowth of Japan and the realization of prosperous people's lives.
Among the government's priority measures to achieve a virtuous cycle of growth and distribution, we can contribute in particular to the Policy Plan for Promoting Japan as a Leading Asset Management Center (hereinafter, "the Policy Plan") and support for businesses, including start-ups.
The Policy Plan is extremely important and will fundamentally change the way people form assets, and will also lead to a smooth supply of funds to support corporate growth. We are proud to say that banks, which hold the majority of household savings of 1,100 trillion yen, are a key player in this policy.
As distributors of financial products, it is important to contribute to our customers' asset formation with our creativity and ingenuity in response to strong policy support from the government, such as the introduction of the new Nippon Individual Savings Account (NISA).
In addition, as the entities closest to customers, supporting the improvement of peoples' financial literacy and ensuring of customer-oriented business conduct are important keys to establishing a virtuous cycle from savings to investment: increasing investment by households, corporate growth, and increasing asset income.
We recognize that ensuring customer-oriented business conduct is the top priority of the JBA's activities.
To begin with, this is the concept of customer-orientation or fiduciary duty: a trustee has a duty to put the interests of settlors and beneficiaries first. I understand this to mean that customers are encouraged to take appropriate risks with the correct understanding to achieve a more prosperous life. I will lead the efforts by member banks to pursue the best interests of their customers.
The financial and economic education activities that the JBA has promoted will be transferred to the Japan Financial Literacy and Education Corporation (J-FLEC), which will be established in April. However, it will remain one of our most important topics, and we will work closely with J-FLEC to promote it with our member banks.
Support for start-ups, one of the themes in the Policy Plan, is also an important policy that will affect Japan's growth rate over the medium to long term. We recognize the importance of resolving financial issues such as investment in start-ups - which remains small compared to the United States and Europe - and ways of exits that are often through small IPOs.
As in the United States, we would like to support start-ups in hope that they will become the growth engine of our country.
In addition, as the transition to the post-COVID-19 world progresses, not only cash flow support but also support for business improvement and rehabilitation is a policy that will revitalize the Japanese industry from the ground up. We are expected to play an even greater role while continuing the existing momentum.
To create a virtuous cycle of the revitalization of entrepreneurship and business restructuring, innovation creation and productivity improvements, and industrial structural transformation, we will encourage efforts by member banks in support for both start-ups and other businesses.
Regarding sustainability, in addition to high-level actions such as organizing concepts, we will enter a phase in which practical actions such as disclosure and customer engagement will become more important than ever.
Such efforts will not be easy, but because Japanese financial institutions are located in Japan or in Asia - a region facing complex challenges - we have the potential to create a virtuous cycle of earnestly tackling difficult issues and leading global sustainability. The JBA will continue to make ambitious and persistent efforts to resolve social issues by developing standards and rules, among others.
The second pillar is "pursuit of a future-oriented financial infrastructure that is safe, secure, and convenient." As I mentioned earlier, I would like to again offer my sincerest apologies to our customers and to the many others for the inconveniences and concerns caused by the failure of the Zengin System in October of last year.
In today's world, where various things in society are connected by a complex and extensive network, we were again keenly aware of the magnitude of the impact of a single failure and the high level of stability and robustness required for the Zengin System as Japan's core payment and settlement network. Last year, we finalized measures to improve the system and prevent recurrence, and we are now in the process of implementing them. We will continue to work tirelessly to achieve and maintain stable operations so that all users can use the system safely.
Regarding the digitalization of the functions of bills and checks, I will take the leadership to achieve the final goal of reducing the number of bills and checks exchanged to zero by the end of 2026. We will also focus on QR code payment of taxes and utility bills, which will greatly increase convenience and efficiency for customers, the government, and banks, as a sanpo-yoshi (good for all three parties) initiative.
In terms of safety and security, it is important to tackle financial crimes, which have become increasingly serious in recent years. The pursuit of safety and security to protect customers' valuable assets tends to be a trade-off for convenience, but we are determined to achieve both at a high level without compromising either.
We will also continue to study more future-oriented financial infrastructures, aiming for a society in which all data is connected. Given that the barriers between financial and non-financial sectors are gradually becoming lower, we would like to have open discussions with various stakeholders.
The third pillar is "the development of a globally sound and resilient financial system." With the international agenda of anti-money laundering, sustainability, and the Basel III implementation, it has become even more important for Japan's financial system to be sound and resilient enough for global standards. A typical example is anti-money laundering efforts. In anticipation of the FATF's upcoming Fifth Round Mutual Evaluations, we will firmly support our member banks, mainly through the Cooperation agency for Anti-Money Laundering (CAML) established last year, to ensure that all banks in Japan reach an acceptable level or higher.
Regarding Basel III implementation, Japan has finalized domestic Basel III rules in line with the international agreement, and they are already in effect. However, in the United States and the UK, discussions over the specifics and timing of its application have not yet been concluded. As the financial system is now globally connected, it is important for each jurisdiction to be firmly aligned in order to prevent financial crises from spreading and risks from becoming unevenly distributed.
Since joining the bank on the eve of the bubble economy in 1985, my life as a banker has coincided with the rise and collapse of the bubble economy and Japan's "three lost decades." I am determined not to allow this period to be extended and turn into "four lost decades," but to resolve matters in our generation and leave a bright future to the next generation.
The Japanese economy now has a once-in-a-lifetime opportunity for regrowth, and we are committed to doing its utmost to achieve this goal. I ask for your support and cooperation.