New Year’s Message

　As we welcome the New Year in 2025, I would like to reflect on the past year and share thoughts on what lies ahead.
　Looking back at 2024, the global economy demonstrated solid growth, particularly in the United States. This growth was driven by the gradual easing of inflationary pressures, which contributed to overall stability despite regional and national variations.
　Domestically, the economy continued its modest recovery, supported by strong corporate capital investments and a rebound in personal consumption. However, some regions, such as Hokuriku, faced lingering challenges, including the ongoing effects of the Noto Peninsula Earthquake in January 2024. Notably, corporate profits reached record-high levels, and the spring wage negotiations resulted in wage increases exceeding 5% for the first time in 33 years. These developments marked a year of steady progress for a virtuous economic cycle to take hold, overcoming the challenges posed by the COVID-19 crisis.
　Additionally, the Bank of Japan made a pivotal decision to raise interest rates for the first time in 17 years, signaling a return to a "world with interest rates". This marked a significant milestone for the banking industry.
　Under this environment, the Japanese Bankers Association (JBA) positioned fiscal 2024 as "a year for contributing to establishing a virtuous cycle in the Japanese economy amidst the progress of the paradigm shift" and pursued its initiatives centered on three pillars, working closely with the government.
　Regarding the first pillar, "encouraging a paradigm shift towards Japan's regrowth," the momentum toward a "shift from savings to investment" has never been stronger, fueled by the government's robust efforts to establish Japan as a Leading Asset Management Center. The banking industry has supported our customers' asset formation by promoting the new Nippon Individual Savings Account (NISA) introduced in January 2024, enhancing financial literacy through collaboration with the Japan Financial Literacy and Education Corporation (J-FLEC) established in April, and ensuring customer-oriented business practices.
　In terms of business support, the importance of revitalization, restructuring, and new business creation has grown significantly as part of Japan's regrowth strategy. In June 2024, the Diet passed a bill introducing Enterprise Value Charge (EVC), a collateral system encompassing all business assets, including intangible assets. EVC is expected to play a key role in supporting startups and other businesses. To further support financing activities, we will develop a lending practice handbook for regional financial institutions to strengthen their capabilities in this area.
　Furthermore, in alignment with the government's Green Transformation (GX) initiative, a cornerstone of Japan's growth strategy, the banking industry continues to promote blended finance in collaboration with the GX Acceleration Agency, launched in July 2024, and to advance the adoption of transition finance in Asia.
　In the second pillar, "pursuit of a future-oriented financial infrastructure that is safe, secure, and convenient," our primary focus is on implementing improvement measures and recurrence prevention strategies in response to the Zengin System outage in October 2023. This includes strengthening the management of system vendors, developing human resources, and enhancing governance. Concurrently, we are laying the groundwork for future-oriented financial infrastructure by resuming development of the next-generation Zengin System, digitizing bills and checks functions and promoting QR code payments for local taxes.
　In addition, addressing financial crimes, which have become increasingly severe in recent years, is an urgent priority. While convenience remains important, we believe it is equally crucial to prioritize safety and security to reliably protect our customers' valuable assets. We will work closely with relevant government ministries and local authorities.
　Regarding the third pillar, "the development of a globally sound and resilient financial system," we have supported member banks' anti-money laundering initiatives, mainly through the Cooperation agency for Anti-Money Laundering (CAML) established in January 2023. Since last year, the focus of these efforts has shifted toward enhancing effectiveness in preparation for the FATF's upcoming Fifth Round Mutual Evaluations. In light of these developments, we will continue to support member banks' initiatives to raise the overall standards of the banking industry as a whole.
　Moreover, strengthening cybersecurity has become increasingly critical as financial institutions expand their use of outsourcing and third-party services, including cloud solutions, while facing more sophisticated and complex cyberattacks. We are addressing this challenge with a heightened sense of urgency and will continue to implement proactive measures.
　This year, the global economy is expected to continue its moderate growth overall. While the effects of previous monetary tightening are becoming apparent with a time lag, anticipated interest rate cuts in many countries and regions are likely to support economic activities. However, risk factors such as a prolonged severe slump in domestic demand in China, worsening economic stagnation in Europe, and persistent geopolitical uncertainties warrant close attention.
　For the domestic economy, while recovery driven by domestic demand is expected to continue, it will likely remain at a moderate pace. Japan remains at the very tipping point on its way out of the "three lost decades." As the transition to a "world with interest rates" progresses further, we will intensify efforts regarding the three pillars and contribute to establishing a virtuous economic cycle, while carefully monitoring both upside and downside risks.