This visit to Paris is FinCity.Tokyo's first mission overseas to promote Tokyo as a financial center. We picked Paris for our first destination for a number of reasons.

First, we have just concluded a Memorandum of Understanding with Paris Europlace upon President Macron's visit to Tokyo on the occasion of the G20 Summit meeting.

Secondly, in my central banking career, France, and in particular Banque de France, has consistently been our closest partner in working for the common cause of serving the international community. For example, in 2012, under the G20 French Presidency I served as Chairman of the Working Group on commodities and literally commuted to Paris almost every month. This would have been torturous had I not been fascinated, like so many Japanese, by the richness of French culture. And that is the third reason.

1. Introduction to FinCity.Tokyo

During the last two decades, Japan underwent two major financial crises, the homegrown financial crisis of the 1990s and the Global Financial Crisis. This was compounded by the demographic problem and deflation. This is why Japan's economic ordeal is often referred to as the "Lost Two Decades". But I disagree with that terminology, because not everything was lost.

We have learned lessons, and supported by the right set of economic policies, Japan is emerging out of those difficulties, paving the way for Tokyo to reach the global stage where it can revive and play a larger role as a financial center.

Let me first tell you how FinCity.Tokyo came to be Established.

The Nikkei stock price plunged after reaching its peak as the asset bubble burst in the early 1990s.

Before the bubble burst, Tokyo used to be a financial center, in parallel with New York and London. But during the protracted period of economic sluggishness that followed, many of the international financial institutions pulled out of Tokyo and relocated their Asian operations elsewhere.

Meanwhile, other Asian cities such as Hong Kong, Singapore, and Shanghai emerged as financial centers in the region. Tokyo has lost competitiveness vis-à-vis these emerging cities.

Japan still faces challenges. To meet the challenges, we need to upgrade the functioning of Japan's financial services. In particular, we need to enhance investment capabilities to address our social imperatives. Which are three-fold.

First, there is as much as 1,800 trillion yen in household financial assets accumulated in Japan. More than half of this is in the form of bank deposits and remains under-utilized.

Second, Japan's population is aging at the fastest speed in the world. More than one out of three will be over 65 years in age by the year 2040. The population is largely dependent on their pension benefits.

And third, this outlook argues in favor of the need for large public pension funds to diversify allocation. As a matter of fact, this is what the GPIF, the largest public pension fund in the world, has started to do.

In order to address these social imperatives, in November 2016, Governor of Tokyo Metropolitan Government, Ms. Yuriko Koike, has launched an "Advisory Panel for Global Financial City: Tokyo".

This provided a format for both domestic and overseas prominent leaders and experts of the financial industry. They discussed over 12 months on issues and key measures to revitalize Tokyo as a global financial hub.

The Advisory Panel proposed, as one of key measures, "establishment of public-private organization" dedicated to continuously improving the Tokyo financial ecosystem. Based on this proposal, an organization named FinCity.Tokyo was founded. This is the genesis of FinCity.Tokyo.

In the interim period, various initiatives and events were launched under the leadership of Governor Koike to promote Tokyo as a financial center.

FinCity.Tokyo was established on April 1, 2019.

First, promote Tokyo to international financial institutions and fintech firms.

Second, facilitate easy entry to Japan for these institutions and firms.

Third, upgrade Tokyo's financial ecosystem while enhancing compatibility with other financial cities.

Forth, make policy recommendations on behalf of market players in Tokyo.

FinCity.Tokyo is currently sponsored by 30 organizations including the Tokyo Metropolitan Government and many of the established financial firms including the Stock Exchange, as well as industry associations.

We are now in the process of diversifying our membership in several respects. We welcome international institutions along with major Japanese players. We welcome insurance and asset management firms as well as banks. And, we welcome small and medium sized firms in addition to established firms

< continued in Part 2: https://investmentjapan.jp/esg/1013/ >