Ministerial Council on the Monthly Economic Report and Other Relative Issues
Cabinet Secretariat, Friday, March 16, 2018
On March 16, 2018, Prime Minister Shinzo Abe attended a meeting of the Ministerial Council on the Monthly Economic Report and Other Relative Issues at the Prime Minister’s Office.
Regarding the assessment of the current state of the Japanese economy, the March Monthly Economic Report states, “The Japanese economy is recovering at a moderate pace.”
Furthermore, in regard to short-term prospects, the Report states, “The economy is expected to continue recovering, supported by the effects of the policies, while the employment and income situation is improving. However, attention should be given to the uncertainty in overseas economies and the effects of fluctuations in the financial and capital markets.”
Japan-Sri Lanka Summit Meeting and Other Events
Cabinet Secretariat, Wednesday, March 14, 2018
On March 14, 2018, Prime Minister Shinzo Abe hosted a summit meeting and other events with H.E. Mr. Maithripala Sirisena, President of the Democratic Socialist Republic of Sri Lanka, at the Prime Minister’s Office.
The two leaders attended a salute and guard of honor ceremony, followed by a summit meeting. Thereafter, the leaders held a joint press announcement.
Lastly, the Prime Minister hosted a banquet at the Prime Minister's Official Residence and said in his address,
“I welcome you all today. I am truly delighted to have President Sirisena and his wife, who are important friends of Japan, here in this country, during this auspicious year of the Seventieth Anniversary of Sri Lanka’s independence.
At the summit meeting held just now, President Sirisena and I held a very extensive exchange of views on various issues including our cooperation toward a free and open Indo-Pacific. From now on, I would like you to relax and enjoy Japanese cuisine.
The People of Japan and Sri Lanka have gotten familiarized with the respective cultures of one another. Among Japanese households, undoubtedly Ceylon tea is famous. Many Japanese enjoy drinking delicious black tea from Sri Lanka. I have also heard that the Japanese TV drama Oshin is very popular among TV viewers in Sri Lanka. Today, we are also joined by Ms. Ayako Kobayashi, who played the role of young Oshin. She has, of course, grown considerably since then.
In the aftermath of the Indian Ocean tsunami that struck in 2004, Japan provided emergency recovery support, including dispatching medical teams. And following the Great East Japan Earthquake that struck in 2011, which marks its seventh anniversary this month, Sri Lanka provided much material and financial assistance, including dispatching support teams to Ishinomaki City. In this way, the cordial relations between our two countries have been nurtured through the dedicated contributions of many people.
We have invited to tonight’s banquet many leaders, who have supported our wonderful friendship in various fields, including politics, the economy, academia, and culture. It is thanks to all of your efforts that Japan and Sri Lanka share such an extremely amicable relationship today. I would like to cordially thank everyone once again, and request your continued cooperation for further developing Japan-Sri Lanka relations.
I would now like to offer a toast to the good health of President Sirisena, his wife, and everyone here today, and to the further development of the relationship between Japan and Sri Lanka. Cheers!”
Courtesy Call from the Speaker of Parliament of the Republic of Finland
Cabinet Secretariat, Tuesday, March 20, 2018
On March 20, 2018, Prime Minister Shinzo Abe received a courtesy call from Dr. Paula Risikko, Speaker of Parliament of the Republic of Finland, at the Prime Minister’s Office.
National Defense Academy Graduation Ceremony
Cabinet Secretariat, Sunday, March 18, 2018
On March 18, 2018, Prime Minister Shinzo Abe attended the graduation ceremony at the National Defense Academy in Yokosuka City, Kanagawa Prefecture, and, as the Commander-in-Chief of the Japan Self-Defense Forces, delivered an address to the graduates.
Awards Ceremony for the Third Space Exploitation Prize
Cabinet Secretariat, Tuesday, March 20, 2018
On March 20, 2018, Prime Minister Shinzo Abe attended the awards ceremony for the Third Space Exploitation Prize, held in Tokyo.
In his address, the Prime Minister said,
“I would like to extend my heartfelt congratulations to all the winners of the Third Space Exploitation Prize.
It was about half a century ago when Apollo 11 landed on the moon. I was merely a wide-eyed young boy then, and I still remember my heart beating with excitement when I looked up at the moon in the night sky.
In the 20th century, countries invested large sums in national space development projects as they competed with one another to make advances in the field. However, this approach has undergone rapid changes over the last 10 years.
It was triggered by a single can of Coca-Cola. The idea was to make small satellites using a Coca-Cola can. Professor Nakasuka, one of the award recipients today, was a core member of this joint project by Japanese and U.S. universities that transformed space development into a sector that has attracted one start-up company after another, and where everyone can take part in its challenges.
Services such as collecting space debris and artificial shooting stars. These are just some of the ideas that I heard about earlier. We are witnessing the emergence of out-of-this-world ideas that are as brilliant as the stars in the night sky. The vast expanse of space is becoming a great frontier for humankind where more and more new businesses are being created.
From national projects to a frontier for private enterprises.
Japan is standing at the forefront of this global paradigm shift and is driving it with great momentum. The Government has recently formulated new support packages for fostering space start-ups.
In the next five years, we will make investments amounting to about 100 billion yen in space businesses in partnership between the public and private sector.
In addition, we will also provide a steady flow of human resources. By allowing outstanding JAXA researchers to work in start-up companies in the private sector, we plan to accelerate the flow of human resources and technology from the public to the private sector.
Commander Neil Armstrong of Apollo 11, who stood on the surface of the moon in the 20th century, left us these famous words,
‘That’s one small step for man, one giant leap for mankind.’
In the 21st century, I am confident that you will all be the ones taking the next giant step for the space sector, which holds infinite potential.
I have great expectations for the success of everyone gathered here today from up-and-coming start-ups, to established private-sector corporations and universities.
In closing, I would like to express my wish that you will carry the hopes and dreams of humankind, and pioneer a new age of space development. Once again, congratulations.”
Address by Prime Minister Shinzo Abe at the Memorial Ceremony Marking the Seventh Anniversary of the Great East Japan Earthquake
Cabinet Secretariat, Sunday, March 11, 2018
In the gracious presence of Their Imperial Highnesses Prince and Princess Akishino, it is with the deepest respect that I, representing the Government of Japan, express my condolences on the occasion of the Memorial Ceremony Marking the Seventh Anniversary of the Great East Japan Earthquake.
Seven years have passed since the Great East Japan Earthquake, which caused unprecedented damage centered on northeast Japan and claimed many precious lives.
When I think of the despair of those who lost beloved members of their families and friends in the disaster, I am overwhelmed even now with deep sorrow. It is with my deepest sympathy that I reiterate my sincerest condolences. I would also like to extend my heartfelt sympathies to all those who have been affected by the disaster.
With the passage of seven years since the disaster, reconstruction in the affected areas is steadily proceeding, step by step. In the areas struck by the earthquake and tsunamis, the restoration of infrastructure closely connected to everyday life is nearly complete, while the rebuilding of homes is also expected to be 90 percent completed by this spring.
In the affected areas of Fukushima, which suffered great damage from the nuclear accident, evacuation orders are gradually being lifted, and even in zones that have been specified as difficult to return, preparations for setting up zones designated for reconstruction and recovery are already underway.
Nevertheless, even today, more than 70,000 people are still under evacuation, with some leading uncomfortable lives for a long time, reaching seven years. And, there are many for whom it is still unclear when they will return to their hometowns.
We will stay aware of the circumstances of each and every one of the affected individuals and continue to concentrate our efforts on enabling people to recover in spirit and on providing care for people both mentally and physically, in reflection of the long periods people have been living under evacuation, as well as on offering consultations to assist in rebuilding livelihoods and on forming new communities. We will devote ourselves to providing such assistance seamlessly in ways that meet people’s needs at various stages of livelihood rehabilitation. We will at the same time accelerate reconstruction through such means as preparing living environments and providing assistance for the revival of industries and livelihoods to facilitate people’s return to areas affected by the nuclear disaster.
Consequently, with the determination to take profoundly to heart the valuable lessons learned from the enormous suffering and damage caused by the disaster, we will ceaselessly review disaster-prevention measures and integrate the latest wisdom and knowledge into our defenses. Once again, I would like to make a firm pledge here that the government will exert its united efforts to build a strong and resilient nation that is resistant to disasters.
Since the earthquake disaster, reconstruction has proceeded due to the tremendous support and efforts of the local people and numerous related parties and through assistance received from every corner of the country. Warm support and assistance have poured in from countries and regions around the world, many of whose representatives are present here today. I would like once again to express our sincere gratitude as well as our respect.
The battle against natural disasters is an issue held in common by all countries the world over. It is our responsibility to share with the rest of the world the lessons of the Great East Japan Earthquake as well as our disaster prevention knowledge and technology, which can all be instrumental in minimizing future disasters. We will further strengthen our international contributions in the field of disaster prevention.
In the past, our nation suffered countless disasters that could be described as national crises, but overcame them each time with determination and hope. I vow once again that we will follow hand in hand in the footsteps of our forefathers and continue to move forward.
In concluding, I would like to offer my heartfelt prayers for the eternal repose of the souls of those who lost their lives and I pray for the peace and tranquility of their bereaved family members.
Prime Minister of Japan
March 11, 2018
Japan-ROK Foreign Ministers’ Meeting
Foreign Affairs, Saturday, March 17, 2018
On March 17, commencing at around 9:30 a.m. for approximately 45 minutes, Mr. Taro Kono, Minister for Foreign Affairs, held a foreign ministers' meeting with H.E. Dr. Kang Kyung-wha, Minister of Foreign Affairs of the Republic of Korea (ROK). The overview of the meeting is as follows.
1. Minister Kono expressed his appreciation for the detailed explanation provided by Mr. Seo Hoon, Director of the National Intelligence Service of the ROK, about the outcomes of the ROK special envoy delegation's visit to North Korea and the United States, and also extended his respect for the efforts by the Government of the ROK to date.
2. Minister Kono noted that based on past experience, it is necessary to uphold the maximum pressure campaign to ensure that North Korea abandons all nuclear and ballistic missile programs in a complete, verifiable, and irreversible manner. He stated that Japan's stance of seeking to normalize its relations with North Korea remains the same, in accordance with the Japan-DPRK Pyongyang Declaration, through comprehensively resolving outstanding issues of concern such as the abductions, nuclear and missile issues. He requested the ROK side to raise the abductions issue during the upcoming inter-Korean summit meeting and also noted that Japan will engage in close trilateral cooperation with the ROK and the United States ahead of the inter-Korean and U.S.-North Korea summit meetings.
3. The two ministers confirmed that Japan and the ROK will continue to apply maximum pressure to ensure that North Korea's words are translated into concrete actions to abandon its nuclear and missile programs. The two ministers also confirmed that Japan and the ROK will cooperate towards the resolution of the abductions issue.
4. With regard to bilateral relations, the two ministers confirmed that they will work together to advance a future-oriented Japan-ROK relationship while properly managing difficult issues.
Extraordinary Press Conference by Foreign Minister Taro Kono
Foreign Affairs, Saturday, March 17, 2018
Mr. Taro Kono, Minister for Foreign Affairs: This morning from around 9:30 a.m. for approximately 45 minutes, I held a meeting with Dr. Kang Kyung-wha, Minister of Foreign Affairs of the Republic of Korea (ROK). I expressed my appreciation for the detailed explanation provided by Mr. Seo Hoon, Director of the National Intelligence Service of the ROK about his interactions with North Korea, and also conveyed my respect for the efforts by the Government of the ROK. I also noted that based on past experience, it is necessary to uphold the position to continue to apply maximum pressure to ensure the realization of complete, verifiable, and irreversible denuclearization (CVID) by North Korea, and the ROK side is of exactly the same view. I stated that Japan's stance of seeking to normalize its relations with North Korea remains the same, in accordance with the Japan-DPRK Pyongyang Declaration, through comprehensively resolving outstanding issues of concern such as the abductions, nuclear and missile issues, and I also requested the ROK side to raise the abductions issue during the upcoming inter-Korean summit meeting. I requested close cooperation between Japan and the ROK towards the resolution of the abductions issue. In addition, I noted that Japan will engage in close trilateral cooperation with the ROK and the United States ahead of the inter-Korean and U.S.-North Korea summit meetings. Foreign Minister Kang stated that it is necessary to apply maximum pressure to ensure that North Korea's words are translated into concrete actions to abandon its nuclear and missile programs, and that the ROK will engage in close cooperation with Japan towards resolution of the abductions issue. Given that this year marks the 20th anniversary of the Joint Declaration on “A New Japan-Republic of Korea Partnership towards the Twenty-first Century” concluded by President Kim Dae Jung and Prime Minister Keizo Obuchi, we also confirmed that we will work together to advance a future-oriented Japan-ROK relationship while appropriately managing difficult issues.
Also, yesterday afternoon (March 16), I had the opportunity to meet with the 20 high school and university students who are participating in the first “Think of Okinawa’s Future in the United States” (TOFU) program. The 20 participants from high schools and universities in Okinawa have visited Washington D.C. and I believe they are now on their way to New York. I hope that in line with the objectives of the program, by meeting with various people in the U.S. and exchanging opinions, they will have an opportunity to think about how Japan and Okinawa are viewed from the United States and also consider Okinawa’s future, and share their experiences with their friends back in Okinawa. I had the opportunity to interact with the participants, and I was frankly impressed by the sheer breadth of their thoughts on various matters and ideas for what needs to be done and how to go about doing it. The Ministry of Foreign Affairs will give all the support it is able to give for this program and I would be delighted if, through its continuation, it helps to stimulate the ideas of young people in Okinawa by giving them the opportunity to have an external perspective. Nothing would give the ministry greater pleasure than to see the young people of Okinawa being provided with various platforms for participation, in accordance the original objectives of the TOFU program. That ends my opening remarks.
Reporter: Did you tell the ROK side today that if North Korea were to accept inspections by the International Atomic Energy Agency (IAEA), Japan would be prepared to cover the initial costs?
Minister Kono: We share the same view as the ROK that it is necessary for North Korea to accept IAEA inspections. I noted that Japan is ready to cover the initial costs of such inspections.
Reporter: You have just stated that you made a request for the abductions issue to be raised in the inter-Korean summit meeting, so what kind of response did you receive from the ROK side?
Minister Kono: Discussions are continuing concerning the format the inter-Korean summit meeting will take, but today we confirmed the necessity of the ROK also working closely with Japan towards the resolution of the abductions issue.
Reporter: As preparations continue for the inter-Korean and U.S.-North Korea summit meetings, did the ROK side raise any general areas or points on which it would like Japan’s cooperation?
Minister Kono: One point is that we must continue to apply maximum pressure so that North Korea’s words about denuclearization are translated into actions. Another point is that as North Korea will probably take incremental actions towards denuclearization, we want to engage in close cooperation with the United States and the ROK to ensure that there are no inconsistencies in how we respond to any such actions by North Korea. I also confirmed this point with the U.S. side yesterday (March 16) and I think that Japan, the U.S. and the ROK are in broad alignment in terms of how to respond.
Reporter: Was there any specific mention of a particular role that the ROK wants Japan to fulfil?
Minister Kono: I think that as we move forward there may be specific roles that could emerge within the context of Japan-U.S.-ROK cooperation, but at the moment we have confirmed that we will continue to work closely together in the same direction, given the necessity of realizing CVID and the abandonment of not only inter-continental ballistic missiles (ICBM) but also short- and medium-range missiles.
Reporter: In your series of meetings with the U.S. did you convey Japan’s readiness to cover the initial costs of IAEA inspections?
Minister Kono: I recently visited the IAEA, where I discussed various matters with Mr. Yukiya Amano, Director General of the IAEA, and I discussed these also with the U.S. side yesterday. In that meeting I stated that Japan is prepared to cover the initial costs that will be required for IAEA inspections.
Reporter: You earlier referred to a future-oriented Japan-ROK relationship, so did you have any discussions about the Japan-ROK agreement on the comfort women issue in the meeting?
Minister Kono: As almost all of the time was spent discussing issues relating to North Korea, there was no time left to cover other individual issues.
Reporter: Did you not call for the ROK side to implement the Japan-ROK agreement?
Minister Kono: There was no time to engage in discussions on specific bilateral issues.
Reporter: In recent opinion polls conducted by media organizations, the approval rate has fallen sharply. Some of the latest polls suggest that more people do not support the Cabinet than those who do. What do you think are the factors behind the drop in the support rate?
Minister Kono: I understand that various media organizations are conducting opinion polls so I would like to see the figures for myself, but I think that it is undeniable that the Moritomo Gakuen issue is a factor. I think that it is necessary for the Government to explain thoroughly those things that need to be explained and for each Cabinet minister to diligently attend to their various areas of responsibility. As Foreign Minister I will make every effort to do the things that I need to do, including with regard to the issue of North Korea.
Reporter: Some people have also noted that this matter calls into question the credibility of legislative bodies, including the trustworthiness of Diet responses. As one of the Diet members, what is your view of the situation?
Minister Kono: Of trust in legislative bodies?
Reporter: Of the trustworthiness of the Diet and responses given in the Diet.
Minister Kono: My view is that as the Diet is the supreme organ of state power, it is imperative to engage earnestly in questions and responses in the Diet.
Communiqué,G20 Finance Ministers and Central bank Governors Meeting,Buenos Aires.
Ministry of Finance, Tuesday, March 20, 2018
The global economic outlook has continued to improve since we last met in October 2017, with the broadest synchronised global growth upsurge since 2010, and a pick-up in investment and trade. While we welcome this progress, recent market volatility despite sound fundamentals of the global economy is a reminder of risks and vulnerabilities. Downside risks persist and, over the medium term, challenges remain to raise growth and make it more inclusive. This is our moment to take action to address structural growth impediments, rebuild buffers, reduce excessive global imbalances, and mitigate risks. We discussed key risks to the outlook, including financial vulnerabilities that could be revealed with a faster than expected tightening of financial conditions and heightened economic and geopolitical tensions. We agree to continue using all policy tools to support strong, sustainable, balanced and inclusive growth. We will implement structural reforms to enhance our growth potential. Fiscal policy should be used flexibly and be growth-friendly, prioritise high quality investment, while enhancing economic and financial resilience and ensuring debt as a share of GDP is on a sustainable path. Strong fundamentals, sound policies, and a resilient international monetary system are essential to the stability of exchange rates, contributing to strong and sustainable growth and investment. Flexible exchange rates, where feasible, can serve as a shock absorber. We recognise that excessive volatility or disorderly movements in exchange rates can have adverse implications for economic and financial stability. We will refrain from competitive devaluations, and will not target our exchange rates for competitive purposes. International trade and investment are important engines of growth, productivity, innovation, job creation and development. We reaffirm the conclusions of our Leaders on trade at the Hamburg Summit and recognise the need for further dialogue and actions. We are working to strengthen the contribution of trade to our economies.
Technology, including digitalisation, is fundamentally reshaping the global economy given its borderless and intangible nature, and its increasing ability to automate cognitive tasks. We are developing a common understanding of the nature of the changes and their potential implications. Transformative technologies are expected to bring immense economic opportunities, such as new ways of doing business, new industries, new and better jobs, and higher GDP growth and living standards. At the same time, the transition creates challenges for individuals, businesses, and governments. These include changes to labour markets, the growing importance of skills and adaptability, and the risk of increased inequality within and between countries. Policy responses, including international cooperation, are needed to harness the opportunities and ensure the benefits are shared by all. We therefore agree to develop a menu of policy options for consideration at our meeting in July.
Infrastructure is critical to boost productivity, enhance connectivity, sustain long-term inclusive growth and provide our citizens with physical and digital access to the new economy. Despite its importance, a persistent infrastructure financing gap remains. Public financing of infrastructure is essential but mobilising additional private capital is needed to meet global infrastructure needs. To achieve this, we agree to promote the necessary conditions to help develop infrastructure as an asset class. To guide our work, we endorse the Roadmap to Infrastructure as an Asset Class which builds on the outcomes of past G20 presidencies and draws together the steps needed to achieve our ambition. The Roadmap identifies seven work streams, including regulatory frameworks and capital markets, as well as quality infrastructure. In 2018, our focus under the Roadmap will be to improve project preparation, move towards greater standardisation of contracts and infrastructure financing instruments, address data gaps, and improve risk mitigation, taking into account country-specific conditions. We look forward to continuing and deepening the dialogue with the private sector.
We note the report of the Independent Board of the Global Infrastructure Hub recommending renewal of its mandate. We call for coordination among current initiatives sponsored by MDBs and others to avoid duplication of efforts.
We reaffirm our commitment to further strengthening the global financial safety net with a strong, quota-based, and adequately resourced IMF at its centre. We are committed to concluding the 15th General Review of Quotas and agreeing on a new quota formula as a basis for a realignment of quota shares to result in increased shares for dynamic economies in line with their relative positions in the world economy and hence likely in the share of emerging market and developing countries as a whole, while protecting the voice and representation of the poorest members by the Spring Meetings of 2019 and no later than the Annual Meetings of 2019.
Cross-border capital flows offer significant benefits, but their size and volatility may pose policy challenges. We will continue to monitor capital flows and refine our understanding of the tools to improve the resilience of the international monetary system. We recognise the importance of macroprudential policies in limiting systemic risk. We continue to deepen our understanding of capital flow management measures and the conditions under which they might be effective, taking into account country-specific circumstances. We are looking forward to further work by the IMF, based on the IMF Institutional View on Capital Flow Management, that will help inform country actions and to the results of the Review of the OECD Code of Liberalisation of Capital Movement.
Rising debt levels in Low Income Countries (LICs) have led to concerns about debt vulnerabilities in these economies. We agree that building capacity in public financial management, strengthening domestic policy frameworks, and enhancing information sharing could help avoid new episodes of debt distress in LICs. We call for greater transparency, both on the side of debtors and creditors. We reaffirm our support to the ongoing work of the Paris Club, as the principal international forum for restructuring official bilateral debt, towards the broader inclusion of emerging creditors. We support the provision of technical assistance by the IMF and the World Bank Group (WBG) in debt recording and reporting in LICs, where needed, and look forward to the work of these institutions on debt transparency.
The global financial system must remain open, resilient and supportive of growth and grounded in agreed international standards. We will continue to closely monitor and, if necessary, address emerging risks and vulnerabilities in the financial system. We welcome the finalisation of Basel III, which completes main elements of the post crisis reforms. We remain committed to the full, timely and consistent implementation and finalisation of the reforms and their evaluation to help identify and address any material unintended consequences and ensure that the reforms accomplish their objectives. We look forward to the FSB-led evaluation of the reforms, including their effects on the financing of infrastructure investment and on incentives for central clearing of over-the-counter derivatives. We will continue to address the decline in correspondent banking relationships.
We acknowledge that technological innovation, including that underlying crypto-assets, has the potential to improve the efficiency and inclusiveness of the financial system and the economy more broadly. Crypto-assets do, however, raise issues with respect to consumer and investor protection, market integrity, tax evasion, money laundering and terrorist financing. Crypto-assets lack the key attributes of sovereign currencies. At some point they could have financial stability implications. We commit to implement the FATF standards as they apply to crypto-assets, look forward to the FATF review of those standards, and call on the FATF to advance global implementation. We call on international standard-setting bodies (SSBs) to continue their monitoring of crypto-assets and their risks, according to their mandates, and assess multilateral responses as needed.
We will continue our work for a globally fair and modern international tax system and welcome international cooperation and pro-growth tax policies. We remain committed to the implementation of the Base Erosion and Profit Shifting package and welcome progress to date. The impacts of the digitalisation of the economy on the international tax system remain key outstanding issues. We welcome the OECD interim report analysing the impact of the digitalisation of the economy on the international tax system. We are committed to work together to seek a consensus-based solution by 2020, with an update in 2019.
We have made substantial progress on tax transparency. Further steps to implement transparency standards and requirements for the exchange of information for tax purposes will take place this year. Jurisdictions scheduled to commence automatic exchange of financial account information for tax purposes in 2018 should ensure that all necessary steps are taken to meet this timeline. We call on all jurisdictions to sign and ratify the multilateral Convention on Mutual Administrative Assistance in Tax Matters. We look forward to the OECD’s recommendations on how to further strengthen the criteria for assessing jurisdictions compliance with internationally agreed tax transparency standards. Defensive measures will be considered against listed jurisdictions. We continue to support assistance to developing countries to build their tax capacity. We welcome the first conference of the Platform for Collaboration on Tax and the efforts undertaken to help developing countries implement the new international tax standards. We also encourage countries to enhance tax certainty.
We commit to step up our fight against terrorist financing, money laundering and proliferation financing. We call for the full, effective and swift implementation of the FATF standards worldwide. We reaffirm our support for the FATF, as the global anti money laundering and counter terrorist financing standard-setting body, to further strengthen its institutional basis, governance and capacity. We call on FATF to enhance its efforts to counter proliferation financing.
Issues for further action
We ask the IMF, the Bank for International Settlements and the Financial Stability Board (FSB) to present to us at our meeting in April a common Report on “Financial stability risks during policy normalisation”.
We ask the Framework Working Group (FWG) to develop a menu of policy options which we can draw on when responding to the impacts of technological change. It should outline options in potential policy areas relevant to the Finance Track, such as tax and transfer, public expenditure, competition and data, stressing its voluntary and forward-looking nature, and the importance of individual and evolving country circumstances.
We look forward to the convening of an infrastructure private sector advisory group which will provide technical advice on the infrastructure agenda in 2018.
We ask the IMF to continue to develop a stock-take on capital flow management measures, based on the IMF Institutional View on the Liberalization and Management of Capital Flows (IV) to help inform country actions in responding to large and volatile capital flows and to report to us at our meeting in October. We ask the IMF to prepare a note on its Institutional View in Practice, including how it has been applied since 2012, and deliver this to us at our next meeting in July.
We ask the IMF to complete and publish its macroprudential database in April.
We ask the OECD to produce a note on developments on the Code of Liberalisation of Capital Movements at our meeting in July. We ask the IMF and WBG to develop a note on existing debt transparency initiatives and deliver this to us ahead of our next meeting in July.
We ask the IMF and WBG to prepare a document on strengthening technical assistance in debt recording and reporting and deliver this to us ahead of our next meeting in July.
We ask the FSB, in consultation with other SSBs, including CPMI and IOSCO, and FATF to report in July 2018 on their work on crypto-assets.
We ask the FSB to coordinate, with the FATF, the IMF, the WBG, and the GPFI, to monitor the take-up of the recommendations in the FSB report “Stocktake of Remittance Service Providers’ Access to Banking Services” of March 2018 and to report back to the G20 in July 2019.
We ask the OECD to deliver an update to us in 2019 on the progress made regarding the tax challenges of the digitalisation of the economy.
We ask the Platform for Collaboration on Tax to develop its workplan on its commitments by the IMF/WBG Annual Meetings this year and provide a progress report in 2019.
We ask the GPFI to produce, by July 2018, a Policy Guide for G20 and non-G20 countries to harness digitisation to provide financial services to unserved and underserved individuals and businesses currently operating in the informal economy.
We ask the Sustainable Finance Study Group (SFSG) to report, by July 2018, on the development and assessment of options for voluntary adoption by members to help deploy financing, including by creating sustainable assets for capital markets, developing sustainable Private Equity and Venture Capital, and exploring potential application of digital technologies to sustainable finance, taking into account countries’ circumstances, priorities and needs.
We look forward to the upcoming conference on counter terrorist financing on 25-26 April in Paris.
Reports and documents received
Surveillance Note, IMF.
Going for Growth, OECD.
Future of work
Future of Work – Trends, Impacts and the Case for G20 Action, G20 Presidency and Co-Chairs of the FWG.
Technology and the Future of Work, IMF.
Achieving Inclusive Growth in the Face of Digital Transformation and the Future of Work, OECD.
Roadmap to Infrastructure as an Asset Class, Argentina Presidency, 2018.
G20/OECD/WBG Stocktake of Tools and Instruments Related to Infrastructure as an Asset Class Progress Report.
Chairman's letter to G20 Finance Ministers and Central Bank Governors, FSB.
Action Plan to Assess and Address the Decline in Correspondent Banking. Progress report to G20 Finance Ministers and Central Bank Governors meeting of March 2018, FSB.
Stocktake of Remittance Service Providers’ Access to Banking Services, FSB, March 2018.
Progress update on cyber lexicon to G20 Finance Ministers and Central Bank Governors meeting of March 2018, FSB.
Secretary-General Report to Finance Ministers, OECD, Buenos Aires, Argentina, March 2018.
Interim Report of the G20/OECD Inclusive Framework on BEPS on the Tax Challenges arising from Digitalisation, Task Force on the Digital Economy, OECD
Anti-money laundering and terrorist financing
Report to Finance Ministers and Central Bank Governors, FATF, March 2018.
Financing for SMEs in Sustainable Global Value Chains, GPFI.
Policy Paper on Financial Inclusion of Forcibly Displaced Persons - Priorities for G20 Action, GPFI.
Global Infrastructure Hub
Global Infrastructure Hub - Strategic Plan 2019 – 2022.
METI Minister Seko Visits Singapore
METI, Monday, March 05, 2018
From March 2 to 4, 2018, Mr. Hiroshige Seko, Minister of Economy, Trade and Industry, visited Singapore.
In the country, he attended the Fourth RCEP Intersessional Ministerial Meeting and held bilateral meetings each with H.E. Mr. Lim Hng Kiang, Minister for Trade and Industry (Trade), Singapore, H.E. Mr. Suresh Prabhu, Minister of Commerce and Industry, India, H.E. Mr. Dato Erywan Pehin Yusof, Second Minister of Foreign Affairs and Trade, Brunei Darussalam, and H.E. Mr. Enggartiasto Lukita, Minister of Trade, Republic of Indonesia. In addition, he held a telephone conference with H.E. Mr. Wilbur Ross, Secretary of Commerce, the United States.
1. Fourth RCEP Intersessional Ministerial Meeting
Under the chairmanship of Minister Lim, Singapore, the Fourth RCEP Intersessional Ministerial Meeting was held on March 3, 2018, and participants held discussions concerning approaches to advancing RCEP negotiations in 2018.
First of all, the ASEAN economies proposed that negotiations for RCEP should be concluded by the end of 2018. Minister Seko stated that Japan would like to support ASEAN aiming to conclude the negotiation in 2018 as long as a certain level of quality is assured in obtaining balance in terms of Market Access, Rules and cooperation.
Participants also held discussions on approaches to paving the way for the summit meeting scheduled to be held in November 2018, including approaches to taking advantage of ministerial meetings. Minister Seko stated that it is important for ministers not only to task negotiators to discuss matters covered by RCEP, but also to advance the negotiations by setting target dates in each negotiation area and specify issues to be solved at the ministerial level.
Participating ministers confirmed anew the resolution that member countries should make further efforts to conclude negotiations, and based on this, they included the following points in a joint media statement: they instruct all negotiators to ensure that every negotiating round and intersessional meeting achieve concrete outcomes that will bring the negotiations closer to the finish line, and to promptly raise any issues requiring the ministers’ guidance.
2. Bilateral meetings
(1) Meeting with Minister Lim, Singapore
At the meeting with Minister Lim, chairman of the Fourth RCEP Intersessional Ministerial Meeting, both sides exchanged views concerning ideal approaches to future negotiation processes of RCEP and those to overcoming specific challenges and enriched their mutual understanding.
(2) Meeting with Minister Prabhu, India
At the meeting with Minister Prabhu, both sides exchanged views concerning promotion of Japan’s investment in India, global trade issues and RCEP.
(3) Meeting with Second Minister Erywan, Brunei Darussalam
At the meeting with Second Minister Erywan, the first occasion since the inauguration of Minister Erywan, Minister Seko expressed his congratulations for Minister Erywan’s taking office, and both sides agreed on Japan-Brunei cooperation in promoting bilateral economic ties and RCEP.
(4) Meeting with Minister Enggartiasto, Indonesia
Both sides agreed to cooperatively engage in the advancement of RCEP negotiations and exchanged views concerning bilateral trade issues.
3. Holding a telephone conference with Secretary Ross, the United States
At the meeting with Secretary Ross, Minister Seko stated Japan’s strong concerns over the situations in the fields of iron and steel and aluminum involving U.S.’s actions under Section 232 of the Trade Expansion Act of 1962, and both sides exchanged frank views in an open manner.
Summary of Opinions at the Monetary Policy Meeting on March 8 and 9, 2018
Bank of Japan, Monday, March 19, 2018
I. Opinions on Economic and Financial Developments
Japan's economy is expanding moderately, with a virtuous cycle from income to spending operating. Going forward, it is likely to continue expanding on the back of highly accommodative financial conditions and underpinnings through the government's past stimulus measures.
Japan's economy is expanding moderately. Further tightening is being seen in terms of both labor and capital, and firms are starting to work on expanding their production capacity. It is important that the virtuous cycle in which such strong demand encourages firms to make progress in their reforms will be maintained over a long period.
Japan's economy has been growing in a well-balanced manner, with both the supply and demand sides improving. The negative hysteresis -- such as firms' inefficient business processes, their negative stance toward investment, and a decrease in the labor force participation rate -- that has become entrenched through the prolonged shortage of demand and deflation has been dissipating, along with an expansion in demand.
Quantitative and qualitative monetary easing (QQE) is a policy that brings about improvement in not only prices but also the economy as a whole, including production and employment, and it has made considerable achievements. For instance, although the structural unemployment rate was formerly said to be around 3.5 percent, the actual unemployment rate has continued to decline and registered 2.4 percent recently.
The weak recovery in household consumption since last summer is of concern. It is necessary to pay due attention to the extent to which the favorable effects resulting from an increase in exports spread to the household sector through wage increases.
Although corrections in financial markets at home and abroad since February do not appear to have had large negative effects so far on the real economy, which has been firm, their effects on sentiment should be carefully monitored. Developments surrounding North Korea continue to be considered as a geopolitical risk.
The effects of the recent fluctuations in financial markets -- such as a rise in U.S. interest rates, declines in U.S. and Japanese stock prices, and a heightening of market volatility -- on financial institutions' financial conditions need to be carefully examined.
If the current trends of the appreciation of the yen and the decline in stock prices become prolonged, business fixed investment and consumption will be restrained due to negative wealth effects and a deterioration of households' and firms' balance sheets, and the profits of export industries will decrease due to the adverse effects on exports. As these will constrain wages and prices, there will be a risk of a delay in achieving the price stability target.
The year-on-year rate of change in the consumer price index (CPI) is likely to continue on an uptrend and increase toward 2 percent, mainly on the back of an improvement in the output gap and a rise in medium- to long-term inflation expectations.
As the start of the new fiscal year approaches, there have been signs of changes in firms' price-setting stance, as seen in price rises being widely reported by the media.
In forecasting future developments in wages and prices, it is worth paying close attention to the results of the annual spring labor-management wage negotiations.
In terms of projecting price developments, the key is to what extent wage developments after the annual spring labor-management wage negotiations will improve individual firms' price-setting stance and consumers' acceptance of price rises.
Although wage increases by firms have been at around 2 percent for the past few years, real wages registered negative growth in 2017 on a year-on-year basis. Close attention should be paid to whether the rate of increase in wages including bonuses will be sufficient to push up the year-on-year rate of change in real wages to positive territory.
The year-on-year rate of change in the CPI (all items less fresh food) is likely to increase moderately toward 2 percent. However, moves to raise prices have not been pronounced, and it is likely to take time to dispel the deflationary mindset.
The momentum of inflation is not strong enough to achieve the price stability target of 2 percent early.
II. Opinions on Monetary Policy
Considering that there is still a long way to go to achieve the price stability target of 2 percent, it is appropriate to pursue powerful monetary easing with persistence under the current guideline for market operations in order to firmly maintain the momentum toward achieving the price stability target.
There is no change in the judgment that it is necessary to continue pursuing powerful monetary easing with persistence so that highly accommodative financial conditions are maintained.
The Bank should continue with the current monetary policy with the aim of persistently encouraging the virtuous cycle to take hold and achieving the price stability target.
The Bank should aim to achieve the price stability target while gaining consensus among the public on the importance of overcoming deflation.
Amid the inflation rate increasing toward 2 percent and the potential growth rate rising going forward, the effects of monetary easing measures will be enhanced. It will be necessary to consider appropriate policy conduct while taking into account such changes in the environment as well as the side effects of the measures.
Looking at recent developments in the Japanese government bond (JGB) and corporate bond markets, as well as in bank lending, the effects of the decline in the long-term real interest rates on economic activity and prices could be becoming smaller than expected. It is important to consider the desirable shape of the yield curve while taking these effects into consideration.
Since the introduction of QQE, Japan's economy has reached a state of no longer being in deflation. It is important to augment the momentum of the virtuous cycle that has emerged during this process through additional easing measures -- that is, having yields on JGBs with maturities of 10 years and longer broadly lowered further and reinforcing the inflation-overshooting commitment -- and thereby put an end to deflation.
The purchases of risky assets including exchange-traded funds (ETFs) are carried out as part of the policy package aiming at achieving the price stability target, and their policy effects and the possible side effects should continue to be examined from every angle.
As developments in profits of financial institutions have a cumulative impact on their financial strength, there will be a risk of a pullback in financial intermediation if the low-yield environment is further prolonged.
As there is still a long way to go to achieve the price stability target of 2 percent, this is not the phase in which the Bank should consider "normalization" -- that is, gradually reducing the degree of monetary accommodation -- in a concrete manner. However, the Bank needs to explain to market participants so that they can fully understand that "normalization" is still in the process of monetary accommodation and completely different from monetary tightening, which aims at reducing the positive output gap. Such explanation will also be beneficial in smoothly proceeding with "normalization" in the future.
If there is a heightened risk that achieving the price stability target will be delayed, additional monetary easing will be needed; however, as there is not ample room for further monetary easing, fiscal policy is also necessary in overcoming deflation. In that regard, it is desirable to aim at achieving a surplus in the primary balance by setting an appropriate quantitative target in light of developments in economic activity and prices, as well as financial conditions.
Among the dissenting views with QQE, some represent what is called cognitive dissonance in the field of psychology. This is the situation of feeling uncomfortable when confronted with a new fact that is contrary to belief. When one recognizes the fact that the economy is improving, contrary to his belief that QQE would not improve the economy, he tries to reduce the discomfort by denying the fact or insisting that the economy will surely deteriorate in the future although it is currently improving.
III. Opinions from Government Representatives
Ministry of Finance
The budget for fiscal 2018 was approved by the House of Representatives recently and is being deliberated in the House of Councillors.
The government considers that early passage of the budget is the most important measure for stimulating the economy, and it will continue to work toward promptly obtaining the Diet's approval of the budget and related bills in order to ensure a virtuous economic cycle and achieve sustainable economic growth.
The government expects the Bank to continue to work toward achieving the price stability target under "QQE with Yield Curve Control" in light of developments in economic activity and prices, as well as financial conditions.
With regard to the work style reform bills, the government will completely remove all items related to the amendments concerning the discretionary working system, but will aim at obtaining the Diet's approval of the remaining parts during the current session.
The government will conduct a detailed study and present a direction regarding systems for accepting foreign personnel with specialized and technical skills.
The government will prepare to submit to this session of the Diet the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, known as the TPP-11, and related domestic bills.
The government expects that the Bank will work steadily toward achieving the price stability target of 2 percent in light of developments in economic activity and prices, as well as financial conditions.
Announcement of Cabinet Decisions about the Deputy Governors of the Bank of Japan
Bank of Japan, Tuesday, March 20, 2018
The Cabinet has announced the following decisions concerning the Deputy Governors of the Bank of Japan.
Masayoshi Amamiya was appointed Deputy Governor on March 20, 2018.
Masazumi Wakatabe was appointed Deputy Governor on March 20, 2018.
The terms of office for Deputy Governors Kikuo Iwata and Hiroshi Nakaso ended on March 19, 2018.
Tax Agreement with Croatia Agreed in Principle
Ministry of Finance, Tuesday, March 20, 2018
1. The delegates of Japan and the Republic of Croatia have agreed in principle on the tax agreement between Japan and the Republic of Croatia.
2. This Agreement includes provisions for the purposes of clarifying the scope of taxation in the two countries, eliminating international double taxation and preventing tax evasion and avoidance and is expected to promote further mutual investments and economic exchanges between the two countries.
3. This Agreement will be signed after the necessary internal procedures have been completed by the two countries. Thereafter, the Agreement will enter into force after the completion of the approval process in both countries (in the case of Japan, approval by the Diet is necessary).