Mike Kanetsugu, Chairman
Japanese Bankers Association

New Year’s Message

 As we celebrate the start of 2021, I would like to share my thoughts on the past year or so and what lies ahead.

 Looking back at 2020, the COVID-19 pandemic had an unprecedented and hugely transformative impact across the globe. The economic activities of households and companies were restricted considerably as countries around the world adopted strict public health measures to contain the spread of the virus. The Japanese economy also experienced its largest decline on record during the first half of the year. The pandemic revealed various economic and social vulnerabilities, bringing to the fore keywords such as “safety”, “security” and “digitalization.” Irreversible changes have taken place across all areas of business, including working styles, consumer activities and employment. In turn, this has triggered drastic changes to companies’ ideal business models and the future of individual industries.

 The JBA has placed tackling COVID-19 at the top of its agenda and fulfilled its responsibilities as a part of Japan’s financial infrastructure. Specifically, it composed guidelines and encouraged banks to take measures to prevent the spread of COVID-19 at their branches while continuing to provide the financial services that are indispensable to people’s lives. Furthermore, the entire banking sector worked together to deliver COVID-19 aid payments swiftly and accurately. Our top priority will be to continue to provide financial support to customers who are facing financial difficulties due to the COVID-19 crisis in collaboration with government-sponsored financial institutions and other relevant parties.

 We believe it is important to plant the seeds which will later grow and help to shape the future of the Japanese economy. With this in mind, we saw fiscal 2020 as “a year in which to engage in innovation and contribute to sustainable growth and solving social issues,” and have acted accordingly. This year, we will continue to contribute as much as possible to these goals, focusing on the three pillars of our action policy.

 First, in order to fulfill our first pillar of “working towards solving economic and social issues through the provision of financial services”, each bank is putting in place various initiatives to achieve the long-term and stable accumulation of assets necessary for the 100-Year Life Society. We will continue to actively promote these efforts while bearing in mind our fiduciary duties. In addition, we will work on formulating guidelines for transactions with customers who have experienced a decline in cognitive abilities as part of our services for the elderly. Meanwhile, many have advocated for a green recovery from the COVID-19 crisis, and Japan has followed suit, declaring its own target for carbon neutrality. The JBA will play its part as fund providers to address climate change – a social issue of global proportions. On top of this, we will further promote financing based on business valuations, thoroughly implement the concept behind the special rules laid out in “The Guidelines on Management Guarantees” and contribute to smooth business succession to achieve regional revitalization.

 As part of our efforts to achieve the second pillar – “establishing ‘safe,’ ‘secure’ and ‘convenient’ financial and social infrastructure in the digital age” – we established “The Guidelines on Payment Services Linking Bank Accounts with Funds Transfer Service Provider’s Accounts” in response to incidents of fraudulent withdrawals from bank accounts. We are considering allowing funds transfer service providers to participate in the Zengin System and improving the convenience of frequent payments of small sums. The COVID-19 crisis has led to an increase in non-face-to-face and online transactions, and we are engaging in further discussions with the government and related ministries to digitalize bill and check functions and improve the efficiency of tax and public money payments using QR Codes. We are also considering assigning customers’ “My Number”s to their deposit accounts and public money accounts, and will strive to improve convenience in cooperation with the government and related ministries. We will also take an active role in discussions about central bank digital currencies.

 In light of talks with the Financial System Council, we expect restrictions on the scope of banks’ business will be relaxed. On the other hand, the extensive discussions on firewall rules for banks and securities companies are set to continue and we will carry on providing constructive opinions about the development of Japan’s financial and capital markets.

 Finally, in order to achieve the third pillar of “further improving the soundness and reliability of the financial system”, we have raised the industry standards for AML/CFT measures by participating in an AI demonstration test carried out by the New Energy and Industrial Technology Development Organization (NEDO). We are also conducting activities aimed at preventing financial crimes during the COVID-19 crisis. In terms of financial benchmark reforms, we will make every effort to respond to the discontinuation of LIBOR that is scheduled to take place at the end of the year in accordance with Japan’s unified transition plan. Where international financial regulations are concerned, we will follow discussions and provide constructive opinions, with special focus on various special measures to address the COVID-19 crisis.

 The banking sector has been taking such measures with our eye on the future.

 According to the Chinese zodiac, 2021 is the year of the Metal Ox and is therefore thought to be “a year when that which has not yet been realized or noticed will gain momentum and make a leap forward.” For corporate management, this could be the year when we identify changes in the business environment caused by the COVID-19 crisis, determine the direction of businesses that could become new pillars for the future and give bold assistance to their development. With the support of deregulation, the banking sector has been granted a wide range of options. I assume that the pace of economic recovery this year will be moderate as we seek a balance between preventing the spread of COVID-19 and collapse of the health care system on the one side and maintaining economic activities on the other. Under such circumstances, the banking sector will give its stable support to Japan’s economy on the financial side, and will develop innovations and contribute to the resolution of issues arising during and after the COVID-19 pandemic.