Jan.04.2023

HANZAWA Junichi, Chairman
Japanese Bankers Association

New Year’s Message

 As we celebrate the start of 2023, I would like to share my thoughts on the past year and what lies ahead.

 Looking back on 2022, the gradual progress toward normalization of economic activities based on a “Live-with-COVID” policy was a positive development. On the other hand, the prolonged COVID-19 crisis, supply constraints due to Russia's invasion of Ukraine, the spike in food and energy prices, and tight labor market all exerted higher inflationary pressures globally. Against this backdrop, 2022 was a year of drastic change, as monetary policy shifted significantly toward tightening in various countries, and we saw a historical depreciation of the Yen caused by a widening interest rate differential between Japan and the U.S. in response to monetary policy changes.

 Given this environment, the Japanese Bankers Association (JBA) has envisioned fiscal year 2022 as one of “supporting the creation of new value, and challenges for growth to build a sustainable environment and society” - a strategy supported by three key pillars.

 Regarding the first pillar - “contributing to the welfare and aspirations of customers and society at large through a range of support measures beyond the provision of financial services” - we have participated in discussions with the government and relevant ministries and agencies; issued opinions on financing for decarbonization; and developed initiatives to improve engagement with customers to support their efforts toward decarbonization of their businesses.
 We have also held discussions with stakeholders on the management guarantee system for loans to customers, including start-ups. We will continue to conduct appropriate operations based on “Guidelines for Personal Guarantee Provided by Business Owners” with flexible measures for start-up customers. Also, the public and private sectors have been working together on requests for tax reform - including the expansion of the NISA, a tax-free program for investment – to accelerate the “shift from savings to investment,” as well as measures to improve financial literacy. We wish to contribute to a virtuous cycle of growth and distribution by preparing systems and operational frameworks for a smooth introduction of the new NISA; enhancing educational materials for financial literacy; and responding to deregulation enabling comprehensive financial services to enhance the functioning of financial and capital markets. In addition, individual banks will help create an atmosphere that supports customers taking on the challenge for growth in all aspects, including for example services beyond traditional frameworks, by taking advantage of deregulation of the scope of bank business.

 To support the second pillar - “establishment of a stable and convenient financial infrastructure through digitalization” - we have been promoting the shift to a data-driven society where administrative procedures can be completed digitally. This includes the move toward full digitization of bill-and-check functions and the opening of an electronic clearinghouse, as well as preparations for a QR code system to make local tax payments more convenient. Also, we have developed measures to promote a cashless society, such as the expansion of qualifications for participation of funds-transfer service providers in the Zengin System. Individual banks have also launched the COTRA payment service, which is a new frequent / small-amount payment infrastructure for person-to-person transactions.As the number of participants in this service expands, we expect customers will enjoy even greater convenience. We will continue building a financial infrastructure that will contribute to greater convenience for our customers by establishing a new connection method using APIs in the Zengin System; promoting the use of the Zengin EDI System; participating in discussions on Central Bank Digital Currencies that the Bank of Japan is experimenting with; and engaging in discussions that look ahead to the arrival of a “Web 3.0” society using new technologies.

 Regarding the third pillar - “further enhancement of the financial system for increased resilience and reliability” - we have determined our policy for creating  a Cooperation Agency for Anti-Money Laundering. This institution will provide AI-based scoring services to participating banks in the institution, which we believe will contribute to ensuring resilience of the financial system. Also, in order to render TIBOR more robust, we are considering retiring Euroyen TIBOR and introducing a fallback supplement. In addition, as part of our efforts to comply with international financial regulations, we have held discussions with relevant authorities and communicated the views of the banking industry toward the smooth implementation of Basel III. We will continue to gather the views of the banking industry for financial regulations and communicate appropriately.

 This year, despite concerns that high inflation and energy supply shortages may put downward pressure on the economy, we expect an overall moderate economic recovery as a result of a rebound in service consumption, expanded inbound consumption, and the supportive effect of the government’s economic stimulus package.

 According to the Chinese zodiac, 2023 is the year of the water rabbit( 癸卯: Mizunoto- ū )and is regarded as “the year in which we will think and act with guiding principles and the path we should take and move toward new development.” Another way to read "癸卯" is "Kibō”( which means “hope” in Japanese ). The banking industry will continue to address the challenges our customers face, grow together with them, and contribute to the creation of a bright society filled with new value and “hope”.