I am KATO Masahiko of Mizuho Bank.
It is my honor to succeed Mr. HANZAWA as the JBA Chairperson, and I humbly ask for the support of all present as I undertake the crucial duties of this role.
I would like to take this opportunity to express my sincere gratitude to the former Chairperson, Mr. HANZAWA. In the last fiscal year, changes in the global business environment, including policy developments in countries other than Japan and intensification of geopolitical risks, continued unabated, making it increasingly difficult to anticipate what lies ahead. Amidst such circumstances, Mr. HANZAWA not only addressed urgent issues, but also took the initiative to establish the Working Group on the Future of Mid- and Long-Term Financial Intermediation. Together with a wide range of stakeholders, he led in‑depth discussions on the expected role of financial intermediation in supporting the sustainable growth of the Japanese economy.
Further, through the Study Group on the Future Vision of Payment Systems, he formulated a forward-looking vision for the Zengin System, which forms the foundation of Japan’s payment infrastructure. This vision aims to create a platform capable of supporting future innovation and enhancing international competitiveness.
Collectively, these initiatives are addressing substantial challenges within the banking industry from a medium- to long-term perspective, in light of ongoing transformations in economic and social structures. Through his strong leadership, Mr. HANZAWA has made significant contributions to advancing the development of both the banking industry and the broader financial sector.
I would like to once again express my sincere respect and gratitude for his efforts.
Let me now turn to the current environment facing Japan's banking sector.
The global business environment remains highly uncertain. In particular, multiple areas of uncertainty have arisen simultaneously, including geopolitical risks—most notably the current situation in the Middle East—as well as developments in inflation, shifts in monetary policy, and the ongoing reconfiguration of global supply chains. With respect to the situation in the Middle East, there remains a tangible risk that tensions may become prolonged, giving rise to serious concerns about the potential impact on the global economy. Under these circumstances, both businesses and households continue to face an increasingly difficult decision‑making environment.
Even amid such uncertainty, I have a strong sense that the Japanese economy is steadily regaining its momentum. For example, corporate earnings have reached a record-high level, with ordinary profit margins above 8 percent. In addition, the number of M&As in 2025 exceeded 5,000, indicating a clear shift toward a more positive and proactive mindset among corporate management.
Furthermore, household financial assets reached 2,350 trillion yen as of the fourth quarter of 2025. In line with the Japanese government’s Policy Plan for Promoting Japan as a Leading Asset Management Center, the flow of funds is undergoing a significant shift from savings to investment. While deposits and savings had previously accounted for more than half of household financial assets, that share has recently fallen below 50 percent. Combined with the expansion of the Nippon Individual Savings Account (NISA) program and continued progress in wage increases, investment sentiment has strengthened, and I believe that the flow of funds throughout the Japanese economy has begun to shift more dynamically.
Nevertheless, what Japan has lost over the “lost three decades” is by no means insignificant. It is said that Japan’s nominal GDP has declined to fifth place globally, and challenges remain with respect to global competitiveness. A wide range of issues must be addressed, including improving productivity in the face of a declining population, ensuring the sustainability of regional economies, tackling social challenges such as climate change, and strengthening economic security to guard against rapid changes in the international environment. For these reasons, now more than ever, Japan must fully unleash its latent potential and enhance its presence on the global stage. I believe the role to be played by the financial sector in the realization of such an objective is of exceptional importance.
Against this backdrop, I would like our policy this fiscal year to focus on strongly supporting transformation that will unleash the potential of the Japanese economy. Through the power of finance, I aim to bring out Japan’s latent strengths and firmly facilitate the transition to a sustainable growth trajectory.
In this fiscal year, under the policy I have just outlined, we will advance our initiatives around three key pillars.
The first pillar is constructing a growth ecosystem for the future. We will seek to further solidify a virtuous cycle driven by both industrial vitality and household prosperity. Specifically, aligning with the government’s industrial policies and growth strategies, we will enhance banks’ own capabilities in due diligence and risk-taking. At the same time, through collaboration with a diverse range of financial intermediaries—or, in certain areas, through hybrid public-private approaches—we will strengthen the framework for supplying long-term risk capital to growth investments and startups.
In addition, we will further deepen our dialogue with business and provide close and sustained support for the transformation of smaller regional companies, including related to business succession, business revitalization, and the strengthening of supply chains.
In May of this year, the Act on the Promotion of Cash Flow-Based Lending—commonly referred to as “Enterprise Value Charge”—will be implemented. By making effective use of this and other relevant frameworks, we will move away from excessive reliance on collateral and guarantees. Instead, we will further refine business-based assessment capabilities by incorporating intangible assets such as technological capabilities, intellectual property, human capital, and sales networks, thereby enhancing the quality of financial intermediation that supports improvements in corporate value.
Further, considering our current era of 100-year lifespans, we will actively work to expand products and services that support asset formation across two or even three generations, as well as to promote financial literacy and economic education.
Recognizing that households differ widely in age, experience, and familiarity with digital technologies, we will provide clear information together with attentive support, enabling individuals to engage in asset formation with confidence.
Through these efforts, we aim to foster a virtuous cycle in which household prosperity is reinvested into industrial growth, and to support Japan’s transition to a new phase of economic growth.
The second pillar is innovating for and implementing financial infrastructure that achieves both reliability and convenience.
Globally, new trends in finance are steadily advancing, such as digitalization, practical application of AI, and emergence of stablecoins and tokenized deposits.
We can say with confidence that the current Zengin System has served as a highly robust and reliable payment infrastructure over many years. However, in light of the need to foster future innovation, enhance international competitiveness, and respond to the diversification of payment methods, including stablecoins, we believe it is essential that this infrastructure evolve and transform so that it remains truly useful for customers.
In this fiscal year, we will advance substantive discussions on a future vision for next-generation payment systems. Payments are the lifeblood of society, and their sophistication has a significant impact on both the efficiency of business activities and the convenience of everyday life. In the banking industry, while placing the utmost priority on reliability, we will pursue discussions aimed at a more open and scalable payment infrastructure.
In addition, the exchange of bills and checks at electronic clearing houses is scheduled to be discontinued in March 2027. Five years ago, approximately 40 million bills and checks were in circulation annually; as of 2025, that number has declined to about 14 million, representing a reduction of roughly 65 percent. Nevertheless, we recognize that usage remains uneven across regions, industries, and business types.
The transition from paper-based payment instruments to electronic methods is a critical reform that will help reduce administrative burdens, costs, and risks such as loss, while also contributing to improvements in corporate cash-flow management and productivity. Taking full account of the impact that this transition may have on clients’ day-to-day operations, it is essential to provide careful communication and support to users and to ensure a smooth transition to alternative methods.
To this end, we will proceed steadily not only through our own efforts as financial institutions, but also by working in close coordination with relevant stakeholders, including commerce and industrial associations and governmental authorities. In cooperation with relevant parties, we will address the digitalization of procedures across society—including tax and public fund payments—thereby contributing to greater convenience in everyday life and improved productivity across the economy.
The third pillar is jointly creating a sound and resilient financial system that fulfills the financial sector’s social responsibilities.
Even in an era of rapid change, providing unwavering reliability and a sense of security remains the fundamental responsibility expected of banks. Amid ongoing digitalization, financial crimes—including impersonation scams targeting ordinary customers—have become increasingly sophisticated, with losses continuing to reach record highs. In addition, cybersecurity risks have expanded in recent years, as cyberattacks such as ransomware and targeted attacks have become increasingly prevalent across supply chains.
We will respond to these threats not only at the level of individual financial institutions, but also across the financial sector as a whole, while further strengthening public-private collaboration to ensure both prevention and swift response measures.
We will also steadily advance internationally required initiatives, including AML/CFT measures, to further strengthen confidence in Japan’s financial system.
These are not areas of competition, but rather non-competitive domains in which we must work together. Through such collaboration, we will fulfill our social responsibilities and build a financial sector that continues to meet the expectations of customers and society.
I have outlined the three pillars above; these pillars do not stand independently of one another but are closely interconnected.
Innovation in financial infrastructure can only be realized with a resilient financial system as its foundation, and it is on such innovative infrastructure that a growth ecosystem can operate dynamically and sustainably.
At the center of this virtuous cycle is always trust. By placing the highest priority on continuing to earn the trust of our customers and society, we will steadily move forward in our efforts to rise to the challenge of transformation.
In conclusion, let me once again express the passion behind our policy. I believe that this fiscal year represents a critically important turning point at which the Japanese economy can step forward into a new stage of growth.
Japan possesses significant latent potential, including the growth ambitions of its companies, the financial assets of households, the knowledge and technology embedded in local communities, and the possibilities held by the next generation.
To unleash this potential, the banking industry is now called upon to embrace change without fear, while never compromising its foundation of trust, and to continue to stand alongside all those who are taking on the challenge of transformation.
Through these efforts, we will seek to fulfill the role that finance is expected to play and to contribute to strengthening Japan’s economic growth. As Chairperson of the Japanese Bankers Association, I will take the lead on behalf of the banking industry in upholding this responsibility, and I respectfully ask for your continued support and cooperation.