TAKASHIMA Makoto, Chairman
Japanese Bankers Association

New Year’s Message

 As we celebrate the start of 2022, I would like to share my thoughts on what’s happened and what lies ahead.

 Looking back on the year 2021, although economic conditions varied by country and region, it can be said that the economic recovery has continued mainly in developed countries, supported by the progress of vaccination campaigns and various macroeconomic policies. The Japanese economy has continued to gain momentum thanks to robust external demand underpinned on the back of the recovery of overseas economies. However, consumer spending has been slow to recover due to prolonged restrictions necessitated by the spread of COVID-19 variants. As a result, the recovery of business performance has been uneven across sectors. With increasing vaccine coverage, corporate and household sentiment have recovered, and the path towards the normalization of socioeconomic activities is now being established. However, how well we are able to control COVID-19 and its impact on the real economy, including the impact of new variants, remains unclear.

 Under these circumstances, since I assumed the JBA chairmanship last July, we have been promoting three pillar initiatives, positioning this year as the year in which we support Japan to overcome the current crisis and establish a new, revitalized society and economy. Allow me to elaborate on each of the initiatives.

 The first pillar is initiatives to solve economic and social issues. Since the beginning of the COVID-19 pandemic, the banking industry has consistently prioritized the provision of financial support to customers, and this policy remains unchanged. In addition, in order to support business restructuring and revitalization in the post-COVID period, the JBA as the secretariat has established the Study Group on SME Business Revitalization and has been working to formulate new business revitalization guidelines. In response to climate change, which has become a pressing global issue, the JBA established the Sustainability Promotion Office and formulated an initiative in December last year to set out policies for the realization of carbon neutrality in the banking sector. Furthermore, we will continue our efforts to resolve Japan's diverse economic and social issues, such as revision of the Banking Act and the review of firewall regulations between banks and securities companies, as well as promoting financial and economic education.

 The second pillar is the development of financial infrastructure that meets the needs of the digital age. The JBA formulated its action plan to fully digitize bill and check functions by fiscal year 2026, and in cooperation with the Ministry of Internal Affairs and Communications, formulated a unified QR code system to facilitate local tax payments to be used from fiscal year 2023. In addition, in order to promote the digitization of workflows ranging from placing and receiving orders to settlements in business-to-business transactions, the Zengin-Net established a working group in October last year, and is examining the seamless linkage between electronic invoices and the Zengin EDI system together with the relevant authorities and industries.

 The third and final pillar is building a sound and resilient financial system. Last September, the Financial Services Agency (FSA) proposed draft amendments to the regulatory notices on the implementation of the finalized Basel III framework in Japan. The JBA has been working on measures toward the implementation of the Basel III framework by the end of March 2023, including collecting opinions from our member banks and submitting comments to the FSA. Also, a smooth transition away from the Yen LIBOR, whose publication was suspended at the end of last year, was achieved in cross-sectional cooperation among the relevant authorities and industries. Furthermore, in response to the FATF’s Fourth Mutual Evaluation Report on Japan, in which Japan was designated as a country requiring enhanced follow-up, the JBA has been considering the AML/CFT joint operations and researching overseas cases with the relevant authorities.

 While our work on the three-pillar initiatives progresses, it is clear that none of the challenges faced by the banking sector can be easily resolved. All of these challenges must be addressed step by step in close cooperation with various stakeholders.

 Under these circumstances, I believe that Japan will enter a critical stage of its history in 2022. Considering the macroeconomic environment, it is expected that our customers' efforts to revive and restructure their businesses affected by the COVID-19 crisis will further accelerate with the economic recovery and its normalization. With regards to climate change and digitization, I believe that our country's future hinges upon the country’s ability to put into practice concrete measures to deal with these issues.

 The banking industry must maintain a wide-ranging perspective of the environment surrounding Japan, tackle difficult issues head-on, and take a leading role in the creation of a new, revitalized society and economy through sincere discussions with various stakeholders with a strong sense of urgency and responsibility.

 In closing, I hope that 2022 brings great progress and prosperity for all of you.