Hiroshi Nakaso is Chairman of FinCity.Tokyo, the Organization of Global Financial City Tokyo, a new organization established in April this year to promote Tokyo as a global financial center.
The following is a speech by Mr. Nakaso at Tokyo-Paris Inter-City Asset Management Seminar on July 8, 2019 (shortened and partly edited with his consent). He expresses how FinCity.Tokyo was organized in Part 1 in IJ’s previous issue, and how attractive Tokyo is as a global financial center to all global players in Part 2 below.

2. Tokyo, the attractive city

We are not building a castle in the air, because I firmly believe in the potential for Tokyo to function as a global capital market. Let me tell you why.

Despite persistent uncertainties surrounding the global economy, Japan's economy is no longer in deflation and remains on track to sustained growth.

Corporate profitability remains high, which is translated into increase in capital expenditure, which is a key domestic demand driving the Japanese now.

The unemployment rate has fallen to 2.5%, which suggests full employment. The acute labor shortage has driven firms particularly in the labor intensive industries to embark on labor saving capital expenditure. From a macroeconomic perspective this implies improvement in labor productivity.

The acute labor shortage has encouraged more workers to join the labor market. This is most conspicuous in the case of young female workers. Today, about 8 out of 10 women of the younger generation work. This rate is higher than the United States and close to Nordic countries, where the corresponding figure is 9 out of 10.

And, Japan has a trusted hard currency, the Yen, which has a deep and liquid market after the US dollar and the euro.

In addition, we are proud of the high level reliability of payment and settlement systems operated by the central bank and the private sector.

For example, the BoJ-Net operated by the central bank that settles yen and JGBs is operating until 9 PM now. But it is capable of running 24 hours a day, overlapping European and American time zones, without settlement or exchange rate risks. They serve as key financial infrastructure underpinning Tokyo's function as a financial center.

Last but not least, Japan is a democratic country with transprent rules of the law. With Prime Minister Abe's administration now in its seventh year, the stable poliatical situation enables the government to pursue consistent economic policies.

I would also like to remind you of Japan's attractiveness as a living environment. Japan offers you rich nature, culture, and gastronomic experiences.
Talking about gastronomy, for your information, Michelin awards stars to 230 restaurants in Tokyo, which is unparalleled by any major city in the world, including Paris. (Sorry about that.)
Japan's train systems, including the Shinkansen and commuter trains, operate with utmost precision. They seem to be so obsessed with the notion of precision that if a train arrives at its destination three minutes behind schedule, the conductor will apologize for the delay.
Tokyo is also known to have a very low crime rate, making it the safest city in the world. It is probably the only city in the world where you can take a nap on a subway train, or if you drop your wallet it will most likely be returned to you, although I do not recommend that you try to find out if it's true.
Finally I want to touch upon business opportunities in Tokyo. Business opportunities for foreign asset managers are set to expand.

The reasons for this are;

First, Japanese investors are looking for internationally diversified investment opportunities.

Second, the Japan asset management ecosystem is increasingly embracing diversified talents.

Third, Japanese asset managers are trying to leverage advanced technologies and use of big data.

Meanwhile, Japan offers rich investment opportunities as well.  As I have explained, the macroeconomic environment is expected to remain favorable.  The corporate governance structure of listed companies has shown steady improvement.

Among 4,000 listed companies, there are a number of blue chip SMEs with cutting edge technologies. They have not been well known to global investors until now, but will provide excellent investment opportunities in the future.

As a person native to Tokyo, I believe in the potential of Tokyo to become once again a financial center.  We have just embarked on a very exciting initiative to make this happen.

I look forward to further collaboration with all of you.

Merci Beaucoup, thank you, and arigatou.

About FinCity.Tokyo: https://fincity.tokyo/en/