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Executives' Comments  Press Conferences Chairman Tokura's Statements and Comments
at His Press Conference

September 20, 2022

Consumer Prices and Exchange Rates

(In response to a question about the 2.8% year-on-year rise in the National Consumer Price Index [excluding fresh food] for August 2022) Cost-push inflation played a powerful role in this rise. The Bank of Japan has long set a 2% price stability target and aimed to maintain steady inflation at this level. Accordingly, Keidanren is monitoring whether the current increase in consumer prices fits this trend. However, aspects of the rise that are not sustainable should be the subject of cautious debate on monetary policy review. At the same time, I hope that the current rise in consumer prices will be a trigger toa virtuous cycle of price and wage increases.

It is important for exchange rates to reflect economic fundamentals and move stably. Sudden changes are undesirable. The current rapid depreciation of the yen against the dollar is largely attributable to speculative moves fueled by the widening interest rate gap between Japan and the US. Exchange rate fluctuations have various effects, and it is possible to utilize them to positive advantage. Japan should use yen depreciation as a lever to attract inbound tourism, and proactively publicize and develop the "cool Japan" concept. From a medium- to long-term perspective, Japan also needs to enhance its self-sufficiency rates for energy and food, to build a resilient economy that is less exposed to exchange rate fluctuations.

Easing of Border Measures

(In response to a question about the reported abolition of caps on the number of visitors entering Japan) A decision to abolish visitor entry caps as reported would be an excellent move that I would welcome. Previous easing of restrictions has already had the effect of increasing flows of overseas tourists to sightseeing spots. Since about 70% of pre-pandemic overseas tourists visiting Japan were individual travelers, lifting the ban on individual travel and reinstating visa waiver programs would boost efforts to attract more inbound tourism. Tourism is a growth area, and I hope the government will swiftly ease border measures before Japan's economy starts to lose momentum.

Salary Payments in Digital Money

It is vital to design a system that workers can use with peace of mind. Compensation (capital guarantee) in the event of a fund transfer service provider collapsing is especially crucial. The system currently under consideration proposes a scheme limited to fund transfer service providers that set an account balance ceiling of one million yen and swiftly guarantees workers that they will receive the full amount of their salary via a guarantee body even if a provider collapses. According to an opinion poll on system reform, just under 30% of respondents want to use digital salary payment systems, and most would want to put around 10-30% of their total salary into a digital money account. Judging from the results of this survey, it is possible that bank transfers and digital payments will co-exist for the time being.

50th Anniversary of Normalization of Diplomatic Relations
between Japan and China

Japan-China relations presently face political challenges, and geopolitical risks exist in the areas around both countries. In such times, there is all the more reason to continue exchange to seek out common interests, even if minor differences remain. Over the 50 years since normalization of bilateral diplomacy, our predecessors in Japan and China have pooled their wisdom and not broken off exchange even when problems have arisen. The world cannot thrive without China, and China cannot decouple itself from the world. At the reception marking the 50th anniversary of the normalization of diplomatic relations between Japan and China on September 29, I would like to reaffirm the importance of bilateral dialogue and efforts on both sides looking ahead to the next 50 years.

Executives' Comments