92023

SeptemberMonthly
９月８日発刊
magazine

Financial Services Agency
Newsletter

AccessFSA

No.241
Provisional
Translation

Contents
Policy Commentary Corner (P1-)
P1 Upgrading of Data Utilization - Examples of Analyses Utilizing Granular Dataand Efforts for Data Collection and Management ITO Hitomi, Deputy Director
KIDO Hiroya, Section Chief
Macro-financial Stability and Data Strategy Office, Risk Analysis Division, Strategy
Development and Management Bureau
P4

The 3rd Report by the Expert Panel on Sustainable Finance
MATSUMOTO Ai, Deputy Director
HIROMATSU Natsuki, Section Chief
Sustainable Finance Promotion Office, Strategy Development Division, Strategy
Development and Management Bureau

P7 Publication of (i) the revised version of the “Summary of Issues and Practices for
Dialogues Regarding IT Governance of Financial Institutions” and (ii) the“Analysis
Report of Financial Institutions’ Computer System Failures"
NOGUCHI Yoshihiro, Financial Inspector
YAMAKOSHI Shinya, Financial Inspector
Risk Analysis Division, Strategy Development and Management Bureau
P10

Summary of "Progress Report on the Efficiency of Financial Intermediation"
OKAMURA Ryuji, Deputy Division Chief
ODAKA Takuma, Section Chief
MASUKO Yuki, Section Chief
Regional Financial Planning Office, Banking Business Division II, Supervision Bureau

Notices (P13-)
P13 Holding of Japan Weeks for Realizing an International Financial Center
P15 Children's Visit to Kasumigaseki (Government District)
JFSA’s Major Activities in July (P17)
Access the online version here
https://www.fsa.go.jp/en/newsletter/2023a.html

Policy Commentary Corner

Upgrading of Data Utilization- Examples of Analyses Utilizing Granular Data and Efforts for Data Collection andManagement ITO Hitomi, Deputy Director
KIDO Hiroya, Section Chief
Macro-financial Stability and Data Strategy Office, Risk Analysis Division, Strategy Development and Management Bureau

1. Introduction
Data utilization in public administration has
become increasingly important in recent years. As
stated in the "JFSA Strategic Priorities July 2022June 2023" published in August 2023, the FSA is
also endeavoring to better utilize data to ascertain
the current status in a multifaceted manner as partof the initiatives for upgrading financial policy. As
granular data, such as loan details for corporations,will start to be regularly collected by stages, the
FSA is conducting analyses using granular data ona trial basis with the aim of utilizing those data inpolicy planning and monitoring. This June, the FSA
compiled several analysis examples and publicizedthem as the "FSA Analytical Notes – FSA Data
Analysis Examples –" (FAN).*1 Those analysis
examples are outlined and the FSA's efforts forcollecting and managing granular data, which serveas the analysis base, are introduced below.
2. Examples of analyses using granular data
(outline of FAN)
FAN introduces three data analysis examples. The
first is the analysis concerning current trends infinancial conditions of the corporate sector. The
post COVID-19 trend of corporate finance, or thesituation of the food and accommodation services,
etc.,*2 which are considered to have been seriously
affected by COVID-19 in particular, was analyzed
based on corporate finance data provided by
Teikoku Databank. The earnings and debts of thiscategory show a sign of improvement on average,
but when dividing companies into groups from a
specific standpoint, there are aspects that we needto continue monitoring (Figure 1).

(Figure 1) Portion of insolvent enterprises (SMEs)

Food and accommodation services
Other sectors
FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022

The second is the analysis concerning credit risks
in bank loans. The FSA constructs and estimates amodel to assess the credit risk of the loan portfolio
using anonymized data of the financial statements
and credit profiles of corporate borrowers frommember banks of the Regional Banks Associationof Japan (62 banks) (Figure 2). This model enables
estimations of the impact exerted by changes in
economic and financial environments on the default
probability based on various viewpoints, such ascompany size or by industry, and is expected tocontribute to the timely and multifaceted analyses.
(Figure 2) ) Actual default proportion and estimateddefault probability

actualestimates*1 FSA Analytical Notes: https://www.fsa.go.jp/en/news/2023/20230929-2/index.html

1*2 Indicating accommodations and food services; education and learning support; and lifestyle-related services

The third is the analysis of climate-related financial
risks. The FSA uses granular data, such as details oftransaction-level corporate loans, collected fromregional banks(49 banks). It then focuses on theindustries, products, and geographic conditions ofclient companies and clarifies the characteristics ofclimate-related risks (transition risks and physicalrisks) faced by regional banks, as well as the regional
differences in these characteristics. For example,
when analyzing financed emissions (figures obtainedby multiplying greenhouse gas emissions fromcompanies for which relevant financial institutions
provide loans or make investments by the rateaccounted for by the amount of relevant loans orinvestments among the total amount of funds
procured by those companies; hereinafter referred toas "FE"), the percentage of high emission industries
in FE (corrected FE) of clients that use regionalbanks as their main banks is correspondingly lower
than the percentage of high emission industries in
CO2 emissions of the entire nation (Figure 3).
Additionally, by crossing data on loan details withhazard maps, it became possible to visually identify
which areas with high water disaster risks areconcentrated (Figure 4). Other than these, the FSA
also analyzed risks of business changes due toclimate change, or more specifically, characteristics
of engine parts manufacturers that will be affected by
the dissemination of electric vehicles.
Incidentally, all of these analysis examples areaffected by restrictions regarding used data andmodels, and due care is required when interpreting
the results thereof. Additionally, analyses using
granular data are still at a trial stage and there isroom for enhancement in methods and data
management therefor. The FSA will continue making
efforts for improving analysis methods and its
capacity to analyze data as its medium- to long-term
challenge.

(Figure 3) Comparison of Industry Composition ofRegional Bank FEs(Figure 4) Mapping of risk levels

3. Efforts for data collection and management
In order to further enhance the aforementioned
analyses, collecting a bigger, high-quality data in atimely manner and developing an infrastructure toaccomodate such data. The FSA and the Bank ofJapan (BOJ) the BOJ have taken initiatives toward
data integration with a view to further enhancing
their monitoring capabilities and reducing the burden
on financial institutions. As part of the initiatives, the
FSA and the BOJ have deliberated on a more
effective and efficient framework for data collection
and management (hereinafter referred to as the“Common Data Platform(CDP)”).
The CDP aims to regularly collect and accumulate
more granular data from financial institutions, suchas transaction-level corporate loan data, and sharethem among the authorities, for replacing part ofexisting data templates that can be substituted with
granular data to reduce the burden on financial
institutions, and for more detailed analysis on
lending/business trends, thereby promoting dialogue
to identify risks in the financial system andencourage financial institutions to support their client
firms.
Toward establishing the CDP, a survey on overseas
developments was conducted in fiscal 2021. In fiscal
2022, the FSA and the BOJ coordinated to conduct a
joint experiment to collect transaction-level
corporate loan data from some financial institutions.
Based on the results of the experiment, theaggregation of granular data will possibly substitutefor some existing data templates, and granular data
have great potential to further enhance theirmonitoring and analytical capabilities (Figure 5).
On the other hand, it also turned out that datacollection and management require a considerable
amount of time and resources, both on the side offinancial institutions and at the FSA and the BOJ in
terms of organizing their operations (Figure 6).

2Based on the joint experiment, the two entities will
start to collect granular data on corporate loans in aphased manner from the second half of fiscal 2023,
with a close communication and coordination withfinancial institutions.
The environment surrounding Japan's financial
system is changing significantly. the FSA and the
BOJ will continue to make steady progress withnecessary data collection and management from a
medium-term perspective, including improving thequality of data, with a view to conducting morecomprehensive and accurate monitoring andanalysis. Through these initiatives, they willencourage financial institutions to further
sophisticate their data governance and risk
management.
4. Toward further upgrading of data utilization
The upgrading of the FSA's practice of data
analyses needs to be achieved simultaneously withthe fostering of data analysis staff. From such
perspective, the FSA has implemented a data
analysis project (a project to integrate analysis
projects within the FSA, including thosevoluntarily commenced by staff members, and offer
experts' advice and other forms of support) as one
means of fostering human resources anddeveloping organizational culture regarding data
analyses. In PY2022, the third year of the project, asystem to award excellent projects was launched(awarded projects were outlined in Access FSA No.
239 for July 2023). Those projects include cases
where staff members personally worked to obtain
new implications from various data on a voluntarybasis. The FSA's efforts for fostering data analysis
staff and developing organizational culture havethus borne fruit steadily.
In order to fully utilize data analysis results inpolicy planning and monitoring, it is also important
to develop a foundation to enable not only staff incharge of analyses but also many other staff
members engaging in policy planning andmonitoring to have access to granular data andanalysis results using them easily whenevernecessary, for example by utilizing BI tools. The
FSA will continue efforts for upgrading financial
policy through data utilization from various
approaches.

(Figure 5) Overview of the experiment(Figure 6) Details and results of the experiment3

Policy Commentary Corer

The 3rd Report by the Expert Panel on Sustainable Finance
MATSUMOTO Ai, Deputy Director
HIROMATSU Natsuki, Section Chief
Sustainable Finance Promotion Office, Strategy Development Division, Strategy Development and Management
Bureau1. Introduction
With the adoption of the Sustainable
Development Goals (SDGs) and the Paris
Agreement, constructing a sustainable society is amajor challenge. It is now essential to promotesustainable finance, which encourages transition to
new industrial and social structures and realizes asustainable society.
From the viewpoint of promoting sustainablefinance as a policy, the FSA’s Expert Panel on
Sustainable Finance, which was established in
December 2020, has had discussed on three pillars,enhancement of corporate disclosure, capital
market functions, the financial institutions and risk
management," and overarching issues such as
promotion of impact investment.
The Japanese government has made clear thatrealizing of sustainable growth opportunities
through the addressing social issues is a key
element in the “New capitalism,” and “ The Grand
Design and Action Plan for New Capitalism 2023
Revision" and the "Basic Policies for Economic
and Fiscal Management and Reform 2023" both ofwhich were decided by the Cabinet in June,
advocate Green Transformation (GX) investments
and loans, as well as promotion of impact
investment. Internationally as well, the importanceof sustainable finance was confirmed at the G7
Minister of Finance and Central Bank Governors
Meeting and the Hiroshima Summit chaired by
Japan.
In consideration of these moves, the FSA
compiled the environmental changes and the trendsof policy measures especially for the one-year
period after the publication of the Second report of
the Expert Panel in July last year, newly recognizedissues and the overall picture on direction of thepolicies, and published them as the Third Report
this June (see the Figure on the next page). Key

points of the Third Report are introduced below,
centered on themes of “capital market functions"and “the financial institutions and risk
management," and on "overarching issues."
2. Capital market functions
In order to have the sustainable finance market
function effectively, it is important to aggregate
diverse information relating to ESG investment andsecure the quality thereof. Japan Exchange Group(JPX) launched an “ESG Bond Information
Platform,” which aggregates information on
issuance of ESG bonds, in July 2022. As theframeworks for sustainability disclosure are being
developed in Japan and overseas, the Expert Panelstated that it is indispensable to develop andmanage GHG emissions data, including those ofclient companies, and recommended as the
direction of future responses that relevant
ministries and agencies, financial institutions, JPX
and other stakeholders should cooperatively discuss
how to aggregate and provide data disclosed bycompanies, while referring to the status ofinternational discussions.
From the perspective of enhancing thetransparency of the ESG investment market, theExpert Panel also discussed the importance of
securing the objectivity and fairness of ESG
evaluation. With regard to the "Code of Conduct
for ESG Evaluation and Data Providers," which
was formulated last December as the first of its
kind in the world, the Third Report points out thenecessity to disseminate it further broadly among
relevant organizations.

4(Figure) Overall picture of efforts for sustainable financeInstitutional investors are expected to play animportant role in providing necessary funding andother support to companies that are promoting
sustainability initiatives from a medium- to longterm perspective, and in encouraging to increase
their corporate value through stewardship activities.
The Third Report points out the necessity to shareknowledge on measures to improve the growth andsustainability of assets, including ESG investment,
based on the characteristics and problems ofindividual investee companies, and shows theExpert Panel's expectation that discussions are to
be held with consideration for sustainability toward
the achievement of a policy which fundamentallyreforms the asset management industry in Japan.

5

3. Financial institutions and risk management
Based on the fact that Japan has a high ratio of
indirect finance, the Third Report states that also in
the field of sustainable finance, it is important for
financial institutions to assess risks andopportunities possessed by themselves and theirclient companies and play an effective role in therelationship with companies.
In particular, transition finance that supports
companies' efforts for reducing GHG emissions
based on their medium- to long-term businessstrategies and capital investment toward
decarbonization is important for advancing thedecarbonization of the economy as a whole.

When companies formulate and implementtransition plans toward decarbonization, financial
institutions are expected to have dialogues with thecompanies and fulfil their roles to make investment
and provide support in accordance with thecircumstances of individual companies. The FSA
established the Working Group on Financial
Institutions' Efforts towards the Decarbonization of
the Economy last October. Recommendations werecompiled this June regarding points to bedeliberated by financial institutions that aim toachieve net-zero through engagement withcustomers. In light of these recommendations, theThird Report states that it is important todisseminate information in Japan and overseas
regarding the importance and eligibility oftransition through developing concrete projects.
It is also important to promote the implementationof transition projects not only in Japan but also
globally, including emerging countries. The Expert
Panel discussed the importance of Japan'scontribution to promoting GX particularly in Asia,
which has strong geographical ties by establishinga consortium with the participation of diverse
stakeholders both from the public and private
sectors to aggregate relevant information and byimplementing projects while taking advantage ofJapan's financial functions.
4. Overarching issues
The Expert Panel also discussed the promotion of
impact investment as one of the overarching issues.
Impact investment that aims to realize both social
or environmental impact and profitability has been
attracting increasing attention domestically andinternationally from the perspective of encouraging
support for companies engaged in introducing
technologies and reforming business models that
contribute to solving social or environmental
problems.
Under such circumstances, the FSA established
the Working Group on Impact Investment under the
Expert Panel on Sustainable Finance last October
to discuss the significance of and challenges inpromoting impact investment. The results of the
discussions were published this June as a report

including the Basic Guidelines (draft) that compile
basic ideas and principles concerning impact
investment.
In consideration of the discussions by theWorking Group, the Expert Panel recommended
that it would be important to formulate guidelines
after undergoing public consultation of the draft
Basic Guidelines and to establish a consortium as aplace for a broad range of stakeholders toparticipate and share knowledge on impact
investment, from the perspective of developing
shared understanding on impact investment andpromoting investments through in-depth dialogues
among diverse market players in Japan andoverseas.
The Third Report also compiles the significance,
points to be deliberated and future direction of
overarching issues other than impact investment,such as biodiversity and human resource
development with sustainable finance expertise.
5. Towards the Materialization of Sustainable
Finance
Since the publication of the Initial Report,
measures and environmental development for thepromotion of sustainable finance have been carriedout steadily. On the other hand, in addition to theclimate change issues, problems that sustainablefinance should consider, such as the aging
population with declining birth rates, human capital,and expansion of economic disparities, areexpanding and becoming more and more serious,
while understanding of and interest in sustainablefinance are increasing and the concept ofsustainable finance is spreading.
Based on the future direction shown in the Third
Report, the FSA will continue having discussions
with diverse stakeholders in Japan and overseas forthepurposeoffinancially
supportingtransformation and growth of the Japanese
economy and society toward building a sustainable
society, and will move forward from the first stageof establishing awareness of sustainable finance tothe second stage of elevating, deepening, andmaterializing its content.

6

Policy Commentary Corner

Publication of (i) the revised version of the “Summary of Issues andPractices for Dialogues Regarding IT Governance of Financial
Institutions” and (ii) the “Analysis Report of Financial Institutions’Computer System Failures"
NOGUCHI Yoshihiro, Financial Inspector
YAMAKOSHI Shinya, Financial Inspector
Risk Analysis Division, Strategy Development and Management Bureau
On June 30, 2023, the FSA published the two
documents: (i) the revised version of the “Summary ofIssues and Practices for Dialogues Regarding IT
Governance of Financial Institutions” (Discussion
Paper (DP) on IT Governance at Financial Institutions)and (ii) the “Analysis Report of Computer System
Failures at Financial Institutions.”*1
1. Revision of the "Summary of Issues and Practices
for Dialogues Regarding IT Governance ofFinancial Institutions"
In order for financial institutions to make theirbusiness models sustainable, it is important to consider
IT strategies integrally with management strategies,
such as developing and enhancing their IT mechanisms
in accordance with changes in users' needs and otherbusiness environments. As these IT strategies deeply
relate to management strategies, top management needs
to proactively contribute to such process. The FSA
defines the mechanism in which top management
exercises their leadership in making linkage between IT
and management strategies and creating corporate
value as "IT governance." In line with this definition,

IT governance includes not only internal control but
also growth strategy to increase business earnings.
In June 2019, the FSA published the original versionof the DP that describes issues that the FSA intends tohave a constructive dialogue with financial institutions
on IT governance. After the publication of the DP,
financial institutions' digital transformation (DX)considerably progressed. Taking into account the recent
developments on DX and other insights gained from
dialogues that the FSA had with the financial industry
in the past few years, the FSA updated the DP andpublished the updated version on June 30, 2023.
In the updated version of the DP, the FSA lists key
characteristics of the relationship among financial
institution’ management strategy, IT strategy and DX
strategy (see Reference 1). In many entities, a DX
promotion unit formulates its DX strategy that aimsto
bring innovation into existing business operations andtransform business models with use of IT, based on the
management strategy and IT strategy even though there
are other cases where an IT strategy on infrastructuresand data utilization bases contains the DX strategy too.

(Reference 1) Concept of IT Governance*1 "Summary of Issues and Practices for Dialogues Regarding IT Governance of Financial Institutions (2nd Version)":7

https://www.fsa.go.jp/news/r4/sonota/20230630/20230630.html (Available in Japanese)"Analysis Report on Financial Institutions' Computer System Failures":https://www.fsa.go.jp/news/r4/sonota/20230630-2/20230630-2.html (Available in Japanese)

The updated version of the DP summarizes a set of
typical approaches to DX taken by financial
institutions and characteristics of these approaches asshown in (Reference 2).
Regarding leadership of top management, the DP
points out that it is important for top management toobtain trust and understanding from stakeholders
through continuously providing information on their
DX strategy from the perspective of enhancing
opportunities and motivation toward the achievementof strategies within the organization. In addition, top
management needs to consider how to reduce andmanage information security risks (including cyberrisks), which is the imperative precondition for
financial institutions to enjoy benefits of theutilization of digital technology in promoting their
DX strategy.
The FSA will maintain dialogues with financial
institutions to observe the state of IT governance,
including developments in best practices andchallenges, and will share with financial institutions
knowledge and insights that the FSA obtains fromsuch dialogues, which may help promote innovation
and DX in the financial sector.

2. "Analysis Report on Financial Institutions'
Computer System Failures"
Based on the Supervisory Guidelines, the FSA
receives reports on computer system failures fromfinancial institutions.*2 Since 2019, the FSA publishes
the “Analysis Report on Financial Institutions'
Computer System Failures” on an annual basis. The
report describes the latest trend in the incidents anddiscusses the results of the analyses on causes offailures, challenges faced by financial institutions,actions required for remediation. The report also
provide some case studies where the FSA sees
beneficial to share good practices with the generalpublic and provide reference for financial institutions
to look at how peers deal with incidents and enhance
resilience.
The latest report was published on June 30, 2023 on
the FSA’s website. A brief summary of each section isprovided as follows:(Reference 2) Approaches and Viewpoints Relating to IT Governance*2 Based on the Comprehensive Guidelines for Supervision, etc., the FSA receives reports on computer system failuresfrom financial institutions, checks and has interviews with financial institutions concerning the statuses ofrestoration from failures, and receives reports on causes of failures analyzed and deliberated by financial institutions,and subsequent remedial measures.
*3 Capacity to recover and restore from a computer system failure; IT resilience includes the capacity to ensure early
restoration of business operations and alleviation of impact on customers upon a computer system failure, notlimited to capacity to prevent failures.

8

(1) Intentional troubles, including cyberattacks
and unauthorized accesses
There have been cases of information leakage
due to an unauthorized access caused by anoutsourcee's error in setting, infection withmalware of equipment for which a support service
has expired, and impossibility to access a website
due to a DDoS attack.*4
It is considered necessary to strengthen security
measures, including those for material outsourcees,
and to strengthen resilience in the event of anincident, for the purpose of preventing occurrence
and recurrence of serious incidents.

(4) System failures triggered by program renewal
or any other non-routine or special operations
There have been cases of unavailability of ATMs
due to an outsourcee's error in setting or inoperation upon irregular work, such as renewal of aprogram.
It is necessary to develop work procedures andconfirm the effectiveness thereof in collaboration
among relevant departments and to strengthen
financial institutions' management of outsourcees,
such as prior verification of work procedures
prepared by outsourcees.
(5) An example of smooth responses after a(2) System failures occurring during routine

computer system failure

operations and maintenance checks
There have been cases of a redundantconfiguration's failure to function in the event of asystem failure or delay in resumption of services
due to insufficient verification of an outsourcee's
procedures for restoration work.
It is necessary to develop restoration procedures
and systems, including responses at outsourcees,
and ensure the effectiveness of the restoration
procedures through joint training with outsourcees.

There was a case in which ATMs became
unavailable due to a communication line andnetwork failure, but responsible staff promptly
restored ATMs manually based on a contingency
plan and responded to customers, and thereby
minimized the impact on customers.

(3) System failures accompanying system
integration/renewal or function addition
There have been cases of system failures due to alack of understanding about specifications of oldsystems or inadequate framework for conducting
review, etc. that affected customers' settlements.
Upon system integration or renewal, it isconsidered necessary to develop system
specifications and other development documents,
as well as a framework for conducting review byproperly deploying experts as reviewers.

*4 Abbreviation of Distributed Denial of Service; A DDoS attack means an attack that aims to disrupt and denyservices in a distributed manner.

9Policy Commentary Corner

Summary of "Progress Report on the Efficiency of Financial Intermediation"
OKAMURA Ryuji, Deputy Division Chief
ODAKA Takuma, Section Chief
MASUKO Yuki, Section Chief
Regional Financial Planning Office, Banking Business Division II, Supervision Bureau
1. Introduction
The FSA compiles financial institutions'
initiatives in collaboration with Local Finance
Bureaus and regional financial institutions'characteristic initiatives, and releases them as a
"Progress Report on the Efficiency of Financial
Intermediation" with the aim of supporting theexercise of financial intermediation functions byfinancial institutions and the creation of sustainablebusiness models for regional financial institutions.
The latest report released in June 2023 compiles
measures for backing up financial institutions'
efforts for supporting business operators, responses
to companies' new needs for support, not limited tofinancial support, and the current status ofgovernance and human capital, which serve as thebase for assisting regional financial institutions
with their sustainable value creation. The report isoutlined below.
2. Backing up financial institutions' efforts forsupporting business operators (i) (Project toCreate Support System for Business
Operators)
Amid the continued impact of COVID-19 andhigh prices on regional economies, it is becoming
more and more important for parties providing
support to business operators in individual regions
to make efforts for highly refined support inaccordance with business operators' actual
conditions in close cooperation and collaboration.
Therefore, Local Finance Bureaus have beenpromoting “Project to Establish Support System for
Business,” together with local bureaus of economy,
trade and industry and parties providing support tobusiness operators, in order to share challenges andcountermeasures in providing support in individual
regions (Figure 1).
In PY2022, there were cases where a prefecture
held opinion exchange meetings for strengthening
collaboration among responsible personnel for
individual regions within the prefecture and wherea local government held a briefing session on
services of organizations supporting businesssuccession, mainly targeting certified tax
accountants, who are major advisers regarding
business succession.
3. Backing up financial institutions' efforts forsupporting
business
operators(ii)(enhancement of abilities to support business
operators)
While the social environment surrounding
financial institutions is changing significantly withfurther population declines and the aging
population, regional financial institutions are
expected to contribute to the growth of regional
economy through supporting business operators as
the core of the economy of individual regions.
From such perspective, the FSA backs up theenhancement of regional financial institutions'abilities so that they can support regional business
operators effectively and efficiently.

(Figure 1) Diagram of support system for business operators(Note) Related organs are not necessarily limited to those mentioned above.

10

For example, the FSA conducted a survey andresearch regarding how AI technologies may beutilized when regional financial institutions set
priorities for their client companies in accordancewith the need for support for business improvement
in order to provide support properly at an earlystage. In this survey and research, the FSA obtained
a large number of individual corporate data
(financial data and attribute data) from multiple
cooperative institutions that hold corporate credit
data, and analyzed those data and external
environmental data by a machine learning method.
Based on the correlations ascertained through theanalysis, the FSA developed an AI model that
contributes to early detection of client companies
with urgent need for business improvement.
Through demonstrations using individual financial
institutions' client data, etc., it was suggested thatthe developed AI model has a certain degree of
accuracy and may be utilized in practicaloperations. In March 2023, the FSA commenced
the distribution of this AI model.
Furthermore, in March 2023, the FSA compiled
the "Points for Support by Business Type"(hereinafter referred to as the "Points for Support")
mainly for business types in which needs forsupport are considered to arise so that front-line
personnel can provide business improvement
support effectively and efficiently, irrespective ofyears of experience. The "Points for Support"
concretely presents major matters to be ascertained
for understanding business operators' situations andconceptual examples of responses for providing
support, and compactly compiles the basics toenable even less-experienced personnel to properly
understand the key points for business
improvement support and make responses. It is
expected that the "Points for Support" will be fully
utilized by financial institutions and serve as a
trigger to deepen their dialogues with business
operators and encourage personnel to further
acquire deeper expertise in business improvement
support.
4. Responses to new needs for support (humanresources matching)
Every year, the FSA conducts the questionnaire
survey* targeting companies that use regional
financial institutions as their main financing bankswith the aim of checking customers' evaluation, etc.
of regional financial institutions' intermediation
functions. Looking at the results of the 2023 survey,
services directly leading to profit improvement,such as "introduction of trade partners and buyers,"
account for large portions among services thatcompanies want to receive from financial
institutions, together with "introduction ofmanagerial talents" and "support for enhancing
business
efficiency(introductionofIT/digitalization)." Out of these services, thepercentage of respondents who would pay fees
therefor was the largest for "introduction ofmanagerial talents," at slightly less than 50%. Thissuggests that there are high needs for humanresources-related support among business operators(Figure 2).

(Figure 2) Services firms want from financial institutions and services firms consider worthy of fee
payment* For the results of the Corporate Questionnaire Survey published in June 2023, see the following.

https://www.fsa.go.jp/policy/chuukai/shiryou/questionnaire/230628/01.pdf (Available in Japanese)11

In relation to such needs for human resourcesrelated support, the FSA has been conducting“Project for Promoting Matching of Business
Administration Professionals to Regional
Enterprises,” since FY2020 to create a new flowof human resources from large companies toleading medium-sized enterprises and SMEs inlocal areas through regional financial institutions'
initiatives for human resources matching, thereby
supporting companies' efforts for securing
managerial talents. This project backs up regional
financial institutions' initiatives for linking
workers with experience of working for large
companies with regional companies in various
forms, such as employment transfer, spare-timejobs or side jobs, or temporary assignment, via
the REVICareer, which is a human resources
platform developed by the Regional Economy
Vitalization Corporation of Japan (REVIC).
The FSA has been developing and improving
diverse systems for enhancing the convenienceand promoting the use of this project based on
opinions and requests from large companies andregional financial institutions. For example, inAugust 2022, the FSA eased the requirements forregistration to allow workers of large companies
to directly register with the REVICareer without
the involvement of their companies' personnel
affairs departments. Through such efforts, the
FSA will continuously back up regional financial
institutions' initiatives for human resources
matching.

5. Regional financial institutions' governanceand human capital
While the social environment surrounding
financial institutions is changing significantlywith further population declines and the aging
population, regional financial institutions are
expected to flexibly respond to those changes,
make brave business decisions and proceed withmanagement reforms. The key elements therefor
are the governance that supports their decision
making based on medium- to long-term visions
and human capital who support the enforcementof governance and the creation of value.
In PY2022, the FSA and Local Finance
Bureaus had dialogues with some regional banks,
focusing on their governance and human capital.
With regard to governance, there was a casewhere a regional bank invited outside personnel
as lecturers of in-house workshops to check theirabilities and willingness before calling on themas outside directors who will positively
participate in deliberations. However, there werealso cases where outside directors had been
appointed
conventionallyfrom
specific
organizations or where the eligibility and theadequate number of directors might not havebeen discussed sufficiently.
Regarding human capital, the FSA conducted aquestionnaire survey targeting 100 regionalbanks concerning their personnel composition,
status of recruitment, and efforts for fostering
human resources, etc. As a result, it was foundthat the percentages of female workers are higher
in sales offices than in the headquarters andgender-based differences were also observed inmanagerial personnel in sales offices. Whilereferring to the results of the questionnaire survey,
individual regional banks are expected toformulate and implement personnel strategies forrecruitment, fostering, deployment, etc. in linewith their business strategies, and to develop aworking environment in which diverse workers
can bring the best out of themselves.
6. Conclusion
The FSA will continuously back up regional
financial institutions' initiatives for exercisingintermediation functions, in collaboration with
relevant organizations, endeavor to ascertain
current status of challenges in relation to regional
financial institutions' intermediation functions,and broadly publicize the results thereof. The
FSA expects that such efforts will encourageregional financial institutions to further exercise
intermediation functions and that this will lead tothe revitalization of regional economies and thedevelopment of regional financial institutions'sustainable business models.

12

Notice

Holding of Japan Weeks for Realizing an International Financial Center

The government of Japan is committed totransformation

promotingvarious problems in the taxation system, and (iv)itsinitiatives

forrealizingan(GX) investment, (iii)
reforminternational financial center and also its initiatives

fundamentallyfor promoting Japan as a leading asset managementbusiness, etc. In response, Prime Minister Kishidacenter. As part thereof, the Japan Weeks is heldstated that it is important to fundamentally reformfrom September 25 to October 6, 2023. In thisthe asset management business, etc. together witharticle, we will introduce the background to thepromotinglaunch of the Japan Weeks and the outline of themeasures to facilitate GX investment for Japan to

major events.

further develop as an international financial center,corporate

the

asset

address

governancemanagement

reformandand also requested the development of policy plan
1. Background leading to the launch of the Japan13

for promoting Japan as a leading asset management

Weeks

center.

The government of Japan has been making various

On June 16, 2023, the Cabinet approved theefforts for enhancing Japan's position as an"Basic Policy on Economic and Fiscal Management

international financial center. At the meeting of theand Reform 2023," which states that with regard to

Council on Economic and Fiscal Policy held ona series of initiatives for promoting Japan as a

April 26, 2023, Minister of State for Financial

leading asset management center and realizing an

Services Suzuki announced the Future Policies forinternational financial center, "[the government of

the Realization of an International Financial Center.

Japan] will effectively and strategically disseminate

The Policies point out that in order to open up

relevant information, by holding promotion events

households' financial assets totaling 2,000 trillion

inside and outside of Japan, including the launch of

yen and realize Japan's development as an

the 'Japan Week (provisional title)' to intensively

international financial center, it is necessary to (i)invite overseas financial business operators topromote effective implementation of the corporate

Japan." Accordingly, it was decided to hold thegovernanceJapan Weeks.

reform,(ii)

promotegreen

2. Events during the Japan Weeks

speech, and at the end of the Japan Weeks, aDuring the Japan Weeks, overseas investors androundtableasset management companies will visit Japan andgovernment officials is scheduled (Oct. 5-6).

event

by

globalinvestors

andmany events will be held under diverse themes,such as sustainable finance, promotion of a shift

3. Conclusionfrom savings to investment, and a leading asset

The government of Japan positions the Japan

management center. For example, the "PRI in

Weeks, which is held for the first time, as an

Person" (Oct. 3-5), which is the 15th annual

important step towards the achievement of anconference of the UN Principles for Responsible

international financial center and a leading asset

Investment,* is one of the world's largest events on

management center. The FSA will diligently work

ESG investment and is expected to be participatedto make the Japan Weeks a significant opportunity

in by more than 1,000 people from around theto globally disseminate Japan's attractiveness as aworld.

financial and capital market and the initiatives ofMany government officials, including Prime

the government of Japan, and to provide a place for

Minister Kishida and Minister of State for Financial

communications among people concerned. We

Services Suzuki, will also participate in the events

hope you will look forward to it!

of the Japan Weeks. In the aforementioned PRI in
Person, the Prime Minister will give a keynote<<List of Japan Weeks Events (as of Aug. 23)>>★ For details, see the dedicated website as well:
https://www.fsa.go.jp/internationalfinancialcenter/lp/japanweeks/index_en.html* The Principles for Responsible Investment were published by the United Nations in April 2006 as six principles

showing the ideas for reflecting the viewpoints concerning ESG issues in institutional investors' process of making
investment decisions and in decisions of their policy on shareholdings.

14

NoticeChildren's Visit to Kasumigaseki (Government District)
On August 2 and 3, 2023, the "Children's Visit to
Kasumigaseki" was held.
This event is aimed at deepening the contact
between parents and children and letting children
have a taste of society on a broad basis throughexperimental activities. Government ministries andagencies including the FSA participate in the event,led by the Ministry of Education, Culture, Sports,
Science and Technology.
The FSA held a lecture and a practical experience
program "Let's Go to FSA!" in order to help
children easily understand the role and importanceof money.
1. Explanations of the FSA: "What does the FSA
do?" "Ask questions in the briefing room!"Firstly, an FSA official explained what the FSA isdoing. The official gave a lecture on works and rolesof the FSA, including its location, in an easy-tounderstand manner, while explaining the separationof powers between the administration, thelegislation and the judicature. Then, children were
given an opportunity to play a role as a reporter andask questions about the FSA and money to the FSA
official. They asked various questions, including
those from the children's viewpoints.

2. "Money Lesson" lecture speechAug. 2"Learn pleasure and difficulty
in working and getting money!"

Lecturer: Thankyou Kurata--------------------------------------------Comedian affiliated to Yoshimoto Kogyo Co.,Ltd.
After graduating a university, he joined theTokyo Regional Taxation Bureau but resigned
after two years and one month. Then, he became
a comedian and has been engaging in speaking
work, giving lectures on tax and money based on
his experience of working for the taxation bureau
and his early days struggling to make it in theentertainment world. He was in the news as hepassed the entrance examination for the
University of Tokyo in 2023.
(Official website) https://thankyoukurata.com/(Available in Japanese)--------------------------------------------Thankyou Kurata talked passionately, based on his
experience, saying that by selecting a job that youfind enjoyable, you can develop your capabilities
and be highly evaluated, and eventually get muchmoney and find your job to be even more pleasant,and that it is important to take actions while wellconsidering what is right about working and aboutmoney. With some easy quizzes, he explained theimportance of obtaining knowledge on money in aneasy-to-understand manner. Children asked manyquestions and positively participated in the lecture to
the end.

Photo: Explanation session

15

Photo: "Money Lesson" lecture speechAug. 3 "Parent-Child Allowance Conference"
Lecturer: Kid's Money Station--------------------------------------------A body established with the hope that kids
understand the importance of goods and money
and acquire capacity to support themselves;
Approx. 300 lecturers are affiliated nationwide
and have given lectures on money education andcareer education at local governments andschools.
(Official website)
https://www.1kinsenkyouiku.com/(Available in Japanese)--------------------------------------------Teacher Batako (Lecturer Tabata) and Teacher
Eko (Lecturer Hagiwara), who are financial
planners, held a lecture titled "Parent-Child
Allowance Conference" to have participating
parents and children consider how to use money.
After a short play by the lecturers, children divided
their allowance by objective, talked about the details
with their parents, and prepared an Allowance
Agreement that prescribes promises concerning their
allowance. They worked diligently throughout thelecture. The lecturers, who are raising children
themselves, also provided advice on financial
education at home to parents. The lecture was agood learning opportunity for both parents andchildren.

Photo: Lecture, "Parent-Child Allowance
Conference"

3. Tour the Minister's office and the FSA
courtroom: "Take a look at the Minister's
office!" "What is the FSA administrative law
courtroom like!?"
In a tour of the FSA, participants were shown into
the Minister's office, where the Finance Minister
engages in work, and the FSA administrative law
courtroom, where hearing procedures are conducted
for the violation of the Financial Instruments andExchange Act. In the Minister's office, not only
children but also parents appeared to enjoy
themselves as they sat in the Minister's chair andposed for a commemorative photo.

Photo: Participants taking a commemorative
photo

4. Experience the weight of bills and gold bullion
worth 100 million yen: "Can you hold bills
and gold bullion representing 100 million
yen?"
At the venue, bills (10 kg) and gold bullion (12.5kg) worth 100 million yen (*replicas) weredisplayed for participants to touch freely. Children
were surprised at their weight and both parents andchildren enjoyed the experience.

Photo: A participant holding up the gold bullion

This fiscal year, events were held face-to-face bothdays for the first time in quite some time, with theparticipation of many parents and children. Children
positively participated in all events and we received
positive opinions from participants that they enjoyed
the events and understood them well and that theywould like to participate in future events. Those
opinions will be fully utilized in planning andholding the events in the future.
16

JFSA's Major Activities in August(August 1 to August 31, 2023)
 Updated list of issuers of gift certificates in repayment procedures based on the "Payment
Services Act“ (August 18, 2023)
 Updated : Dedicated Website for International Financial Center“ (August 23, 2023)
 Japan Weeks for the Realization of an International Financial Center“ (August 23, 2023)
 Comment letter on the International Sustainability Standards Board (ISSB)’s Request for
Information Consultation on Agenda Priorities“ (August 31, 2023)

JFSA's official English X(formerly Twitter) accounthttps://twitter.com/JFSA_en

We are promoting
information dissemination
using X(formerly Twitter) !

Editorial Postscript
The hottest ever summer ended and morning air has come to be cooler. During the summer, I made it a rule
not to eat anything three hours before going to bed, and I recognized a significant change in my mood when I
awake in the morning after resisting temptations at night. I am afraid of possible further temptations during thelong autumn nights, but I would like to maintain the strong attitude to resist temptations both in the morningand at night.
This month's issue introduces what went on in the Children's Visit to Kasumigaseki. It was very impressivethat participating elementary school children enjoyed listening to talks of the lecturers and clearly replied with
their opinions to questions about the way of spending their allowance.
As they came all the way to the FSA, I served as a lecturer and explained about the FSA's ordinary duties,
but it was like a career open house targeting elementary school children (laugh). I would like to positively
provide information on financial policy continuously so that the FSA's duties look attractive to futureadministrative officials.
YANO Shohei, Director,
Public Relations Office, FSA

17(*The opinions expressed in this report are the personal views of the author and do not necessarily reflect the organization withwhich the author is affiliated.)