Provisional Translation

Doubling Asset-based Income Plan

1. Basic concept○ The Kishida administration is promoting efforts to realize a "new form of capitalism."
Looking at the "new form of capitalism" in terms of the flow of funds, we will use the
325 trillion yen in cash and deposits accumulated in the corporate sector to invest inimportant fields such as human resources, startups, Green Transformation (GX) andDigital Transformation (DX), thereby boosting growth. It is also important to use the
cash and deposits that lie dormant in the accounts of Japan's households for investment,
and to increase household income from financial assets in addition to working income.
○ More than half of Japan's 2,000 trillion yen in household financial assets of are held incash and low-yielding deposits. Even after accounting for pensions, insurance and otherindirect holdings, the total amount invested in stocks, investment trusts and bonds is
244 trillion yen, with only about 20 million investors. 1
On the other hand, in the United States and the United Kingdom, an environment has
been created in which even the middle class can easily invest in listed stocks andinvestment trusts. Household financial assets have increased 3.4 times in the UnitedStates and 2.3 times in the United Kingdom over the last 20 years, but only 1.4 times
in Japan due to differences in the investment environment.
○ Cash and deposits account for a larger proportion of household financial assets in Japan
than in Western countries, which is due in part to the post-war development of indirect
financing, in which companies borrow from financial institutions such as banks.
Realizing a shift from savings to investment and promoting a shift to direct finance arealso important in developing a startup ecosystem that raises funds from venture capital,
while also ensuring a steady supply of risk money that supports corporate growth.
○ If we can create an environment in which the middle class can easily invest in highreturn assets, we will be able to increase household income from financial assets.
Furthermore, if household funds become a source of funding for corporate growthinvestment, it would stimulate corporate growth and increase corporate value. If
corporate value rises, household income from financial assets will increase further,resulting in a "virtuous cycle of growth and asset-based income."○ There was once a perception that only the wealthy people invested in stocks andinvestment trusts. However, since the introduction of NISA and installment-type NISA
(also known as Tsumitate NISA), 17 million accounts have been opened and 28 trillion
yen in new investment has been made, and use of these saving accounts among young

people in their 20s and 30s is rapidly increasing.
Furthermore, digitalization has made it possible to easily manage assets using apps andaccess a wide range of financial products with low fees, allowing the development of asystem that allows a diverse range of people, including those with little investment
experience, to participate in asset formation, thereby greatly expanding the middle
class’s asset-based income.
○ In addition, amidst the changing geopolitical situation in East Asia, Japan should strive
to become an "international financial hub" by taking advantage of Japan's
characteristics as a safe and secure country supported by steadfast democracy and therule of law. In particular, along with the easing COVID-19 border control requirement,
we will support the doubling of asset-based income through enhancing theattractiveness of Japan's financial markets by collectively promoting (1) revitalizationof financial and capital markets that contribute to new growth; (2) globalization offinancial administration and tax systems; and (3) development of a living and businessenvironment that supports highly-skilled foreign workers and effective communicationof information.
2. Goals○ Among the goals of the Doubling Asset-based Income Plan, first, we aim to double thenumber of people with investment experience. Specifically, we aim to double the total
number of NISA accounts (ordinary and installment-type accounts) from the current 17
million2 to 34 million in five years.
○ Second, we aim to double investment. Specifically, we will double the amount of NISA
account purchases from the current 28 trillion yen 3 to 56 trillion yen in five years.
Following that, we aim to double the investment amount (total balance of stocks,
investment trusts, bonds, etc.) among households.
○ In order to realize stable asset formation primarily for the stratum centered on the
middle class through achieving these goals, we will implement policy measures with aview to doubling asset-based income itself as a long-term goal.
3. Direction of the plan
○ According to a survey by the Financial Services Agency, the most common reason
inexperienced people have for not investing is "I don't have spare funds" (56.7%). The
second is: "I don't have knowledge about asset management" (40.4%), while the third
is: “Because I feel uneasy about purchasing/holding investments” (26.3%). 4○ This survey shows the importance of simple, easy-to-understand and easy-to-usesystems and the significance of allowing small-scale investments (100 yen to 1,000yen), and that the effectiveness of long-term diversified regular investment is not widely
understood. In addition, in order to support households with financial asset formation
so as to eliminate the lack of knowledge and dispel concerns, it is necessary to establish
a neutral and trustworthy advisory system for consumers.
Based on this, the following seven pillars will be promoted as part of an integrated
effort toward doubling asset-based income.
(1) Major expansion of and making permanent NISA to shift household financial assets
from savings to investment(2) Reform of the iDeCo system, such as raising the eligibility age(3) Creation of a system to encourage the provision of neutral and reliable advice toconsumers(4) Enhancing asset formation for employees(5) Enhancing financial and economic education to spread the importance of stableasset formation(6) Realization of an international financial center open to the world(7) Ensuring customer-oriented business conduct○ Also, tax measures will be considered during the process of future tax reforms.
4. Pillar 1: Major expansion of and making permanent NISA to shift household
financial assets from savings to investment○ NISA (Nippon Individual Savings Account, tax exemption program for small
investment), launched in 2014, has seen a steady increase in the number of investment
customers. Currently, there are 17.9 million NISA accounts, which means one in sevenpeople in Japan have this account. The breakdown is 10.65 million ordinary NISA
accounts, 6.39 million installment-type NISA accounts and 870,000 junior NISA
accounts. The purchase amount is 26 trillion yen for the ordinary NISA system, 2.1
trillion yen for the installment-type NISA system and 0.6 trillion yen for the junior
NISA system. 5○ Looking at NISA usage by income, 70% of individuals holding NISA accounts have anannual income of less than five million yen. Also, based on the amount of assets owned,
the majority of NISA users have less than 10 million yen in household financial assets.
Considering that the average amount of financial assets held by Japanese households
are 10.62 million yen for single-person households and 15.63 million yen forhouseholds with two or more people, it is clear that the NISA system is being usedmainly by the stratum centered on the middle class for asset formation. 6

○ Looking at the opening of NISA accounts by generation, approximately 20% of all
generations have opened accounts. Many installment-type NISA have been opened bypeople in their 30s and younger, while many ordinary NISA have been opened bypeople in their 40s and older. In particular, NISA account purchases by young people
in their 20s and 30s are growing. In terms of the purchase amount by those in their 60s
and older, a large fraction is for ordinary NISA. 7○ According to a survey of individual investors, in response to opening a NISA accountmany made such comments as "I learned that I can start investing with a small amounteven if I do not have a large amount of money," "I have become conscious of long-term,
diversified investment" and "I feel the need to form assets through investment, not justdeposits and savings," which indicates that their image of investment changes
positively. 8○ On the other hand, according to a survey of people without NISA accounts, many of thereasons given for not opening a NISA account were "I am not willing to invest in thefirst place" and "The system is complicated." 9○ NISA is becoming an established entry point for asset formation for the stratum
centered on the middle class in particular. On the other hand, as mentioned above, theutilization rate of NISA is 20%, leaving much room to promote greater utilization.
Therefore, the NISA system will be made permanent to increase the predictability ofthe system and simplified in order to further encourage asset formation among thestratum centered on the middle class. At the same time, we will make the tax-exempt
holding period indefinite and raise the tax-exempt limit.
(1) Making the NISA system permanent○ Currently, there are two types of NISA systems for adults: the ordinary NISA (1.2
million yen per person, tax-free for 5 years) and the installment-type NISA (400,000
yen/year per person, tax-free for 20 years).
○ In 2014, the ordinary NISA system was started as a temporary investment measure, andthen in 2018, the installment-type NISA system was introduced. Initially, the ordinary
NISA was set up with an investment period open to 2023, while the installment-type
NISA was set up with an investment period open to 2037. Currently, the ordinary NISA
is scheduled to be revamped in 2024 and changed to a new NISA with an investment
period set until 2028. In addition, the investment period for installment-type NISA has
been extended to 2042.

○ On the other hand, as long as the NISA system remains as a temporary measure,individual investors and others have pointed out that it is difficult to make long-term
investments due to the awareness that the system will end. From the perspective ofpromoting stable asset formation primarily for the stratum centered on the middle class,
it is necessary to make it possible to predict financial asset formation using NISA by
implementing NISA as a stable system that lasts into the future. Taking this step will
make it possible to encourage continuous investment.
○ Funds in the ordinary NISA can be invested in a wide range of investment vehicles,
including stock investment trusts and domestic and overseas listed stocks. Investments
in companies by individual investors become funds that support corporate growth, andthe fruits of that growth are returned to individual investments to complete the cycle.
Individuals directly providing funds to companies using the ordinary NISA will lead tothe creation of an ecosystem that supports the growth of Japan from a financial
perspective.
○ The installment-type NISA system limits investment to publicly-offered equity
investment trusts and exchange traded funds (ETFs) suitable for long-term, installmenttype and diversified investment that satisfies requirements published by the Financial
Services Agency. For this reason, the system is highly convenient for supporting longterm, installment-type and diversified investment using a small amount of money by
those with little investment experience.
○ Both the ordinary NISA and the installment-type NISA are extremely important.
Therefore, by making the NISA system permanent, we will create an environment inwhich the stratum centered on the middle class, in particular, can continue to form assets
steadily indefinitely.
(2) Indefinite NISA tax-exempt holding period○ Under the ordinary NISA system, profits (dividends, capital gains, etc.) from financial
products purchased through the ordinary NISA account are given a tax exemption for
up to five years after the start of investment. Similarly, in regard to financial products
purchased through the installment-type NISA, profits (dividends, capital gains, etc.)
obtained from investing in certain investment trusts are given a tax exemption for up to
20 years after the start of investment.
○ In the short term, investment yields may fluctuate, but when averaged over the longterm, investment has a significant effect on asset formation. On the other hand, theexistence of a deadline for a tax exemption period means that if unrealized gains orlosses occur in the short term, rather than waiting for the investment price to rise in thelong term, the gains and losses get recognized in the short term. Such a system makes
it difficult to create incentives to continue holding an investment over the long term.
○ Furthermore, for those begin investing in an installment-type NISA in their 20s or 30s,
the 20-year tax-exempt holding period will expire in their 40s or 50s, when they arestill in the asset formation stage. This provides an incentive to withdraw financial assets
before the time comes to use them.
○ For this reason, on the assumption that an appropriate lifetime upper limit forinvestment in NISA is established, then with respect to financial products purchased
through NISA accounts, the tax exemption period for profits (dividends, capital gains,etc.) from financial products will become indefinite, and the incentives for long-termholding of financial products will be fundamentally strengthened.
(3) Increase investment limits for the ordinary NISA and the installment-type NISA
○ Currently, the maximum tax-free annual investment limit for a NISA is 1.2 million yen
for the ordinary NISA and 400,000 yen for an installment-type NISA.
○ Looking at the investment caps in 2021, among those who purchased financial products
through ordinary NISA accounts, 47% of the households in their 60s and older have anannual investment of more than 1 million yen. 10 This suggests that a large number ofpeople invest up to the upper limit of the annual investment cap.
○ In addition, those in their 60s and older who are receiving retirement benefits andcompleted mortgages repayments have a household average of more than nine million
yen in deposits and savings, 11 and have more than six million yen in the ordinary NISA,
which is the lifetime investment limit for this investment account. To shift from savings
to investment, the ordinary NISA investment limit must be increased to encourage
investment by the elderly, who hold the majority of deposits and savings and realize amore attractive asset portfolio and assets allocation for the elderly.
○ Furthermore, as work styles become more diversified, an increasing number of people
are choosing new work styles, such as freelancing, in which they live on non-permanent
income instead of regular income. In the interest of supporting such workstyle diversity,
it is desirable to develop an environment that allows concentrated investment whenfunds are available, making expansion of the ordinary NISA highly necessary.
○ On the other hand, on the assumption that the current annual limit of 400,000 yen may
not be sufficient for the installment-type NISA, expanding the investment limit for the
installment-type NISA in the same way as for the ordinary NISA would be highlysignificant. In addition, since the current annual upper limit is 400,000 yen, the monthly
investment limit is 33,333 yen, which is not an amount that can be evenly divided into
12 months. Therefore, it is also necessary to set the amount to make it possible to makeregular monthly investments in equal amounts.
○ In this way, with regard to the maximum amount of tax-exempt investment in a NISA,
increasing the maximum amount of investment for both the ordinary NISA and theinstallment-type NISA will improve the investment environment for households infavor of achieving the goal of doubling asset-based income.
(4) Treatment of the new NISA system to be implemented from 2024
○ From January 2024, the ordinary NISA is scheduled to shift to a new two-tier NISA
system. In general, investment in the second tier of the ordinary NISA will only beallowed if investment is made in the first tier.
○ According to a survey of investors who answered that they would not use the new NISA
system, 45% gave as the reason that "the two-tier system is complicated," while 31.5%
said that they "don’t want to make an installment-type investment in tier one." 12○ From the perspective of making the system simple, easy to understand and user-friendly,
we will review the implementation of the new NISA system and expand features of thesystem currently under consideration.
(5) Simplification of NISA procedures○ In order to make it easier for users, including those with no investment experience, touse NISA, and to reduce the burden on financial institutions that provide services andservice users, we will cooperate with related government ministries and agencies toutilize digital technology to simplify and rationalize procedures related to NISA.
Furthermore, working with the Digital Agency, we will consider simplifying the
opening of NISA and iDeCo accounts, including the use of Individual Number Card
(My Number Card).
5. Pillar 2: Reform of the iDeCo system, such as raising the eligibility age[Reform of the iDeCo system]○ iDeCo (individual-type Defined Contribution pension plan) is a pension plan systemthat allows individuals to participate in the plan and determine by themselves how muchto contribute and how to manage the contributions. Under the system, benefits can bereceived from the age of 60, and the amount of benefits is determined by the total
amount of contributions and the profits derived from the investments of thosecontributions.

○ Tax preferential treatment in three parts applies to iDeCo: (1) contributions are fully
deducted from income, (2) investment returns are reinvested tax free and (3) special tax
breaks apply when receiving benefits. If you receive benefits as a lump-sum, you canreceive a "retirement income deduction," and if you receive a pension annuity, you are
eligible for a "public pension deduction."○ The iDeCo system, which has the preferential tax treatment, is used by a wide range ofage groups as a means of asset formation for a more comfortable retirement life.
According to a survey that looked at iDeCo participants by asset holdings, many haveholdings in the range of 1 million to 5 million yen, 13 and 50% of iDeCo participants intheir 20s started asset management after using iDeCo. 14 In this way, iDeCo is usedmainly by the stratum centered on the middle class and contributes to increase theirhousehold income.
○ Since its establishment in 2001, iDeCo has undergone a series of system reforms, suchas expanding the scope of participation eligibility. In the January 2017 revision of thesystem, the scope of participation eligibility was expanded from only National Pension
Category 1 insured persons and Category 2 insured persons who did not participate ina corporate pension plan to all types of National Pension Fund insured persons. FromMay 2022, the age at which people can participate in an iDeCo plan was raised from60 to 65. In general, anyone under the age of 65 who is insured by the National Pension
Fund can participate in the plan.
○ Amid this improvement of the system, the number of iDeCo participants has increased
from 430,000 at the end of March 2017 to 2.39 million, 15 but the number of participants
is still small compared to that of public pension participants (67.25 million), 16 leaving
considerable room for further utilization of the iDeCo system. We will improveawareness of the system and eliminate the complexity of procedures, so that iDeCo canbe used more easily and widely.
○ Furthermore, in 2020, a bill to revise the Act on Stabilization of Employment of Elderly
Persons was enacted, making companies obligated as of April 2021 to take measures tosecure employment for the elderly between the ages of 65 and 70, along with othermeasures provided to support employment up to the age of 70. In light of the fact thatthe obligation to make efforts to secure employment opportunities for the elderly was
extended to the age of 70, and that workstyles and lifestyles are becoming more diverse,
it is necessary to further improve the environment for household asset formation inadvance of reaching old age. Therefore, we will reform the iDeCo system.

(1) Raise the iDeCo participation eligibility age○ In order to participate in iDeCo, a person must be insured by the national pension fund.
Regarding the age of eligibility for participating in iDeCo, differences exist: (1)Category 1 insured persons (self-employed, etc.) are under 60 years of age, (2) Category
2 insured persons (company employees, public servants, etc.) are under 65 years of age,(3) Category 3 insured persons (nonworking spouses) are under 60 years of age, and(4) voluntarily insured persons (voluntary enrollment is possible for those who have yet
to pay 480 months of National Pension contributions) are less than 65 years old.
○ Therefore, due to workstyle reforms and the fact that companies need to make efforts
to ensure workers up to the age of 70 have job opportunities, we will raise theparticipation eligibility age for participating in iDeCo to 70. For this reason, along witha Financial Verification of Public Pension Plan in 2024, necessary legislative measures
will be taken.
(2) Raise the iDeCo contribution limit and raise the upper limit on the receiving benefitsage○ The current iDeCo contribution limit is 68,000 yen per month for Category 1 insured
persons (self-employed, etc.), 12,000 yen or 20,000 yen per month for Category 2
insured persons (company employees, public servants, etc.) who participate in a
corporate pension plan, and 23,000 yen for those who do not participate in a corporate
pension plan, and 23,000 yen per month for Category 3 insured persons (non-working
spouses).
○ From December 2024, the contribution limit for those among company employees andpublic employees who participate in a corporate pensions is scheduled to become aunified amount of 20,000 yen.
○ Currently, the upper age limit at which you can start receiving iDeCo benefits is 75
years old.
○ Regarding raising the iDeCo contribution limits and raising the upper limit of age
eligibility to start receiving benefits, a conclusion will be reached in conjunction with
the Financial Verification of Public Pension Plan in 2024.
(3) Simplification of iDeCo procedures○ Along with NISA, we will also promote the simplification and speeding up of various
procedures related to iDeCo, and will work to improve the efficiency of administrative
procedures, including the use of My Number Card.

6. Pillar 3: Creating a system to encourage the provision of neutral and reliable advice
to consumers[Creating a system to encourage the provision of neutral and reliable advice to consumers]○ According to a survey, 70% of consumers do not see the need to invest in securities. As
for the reasons, 40% said "there is a possibility of losing money", and 30% each said "I
don't have knowledge about finance and investment" and "it's like gambling,"suggesting that there is a great deal of concern due to lack of knowledge. 17○ Financial institutions also play a role in providing information, but in a survey asking
the public image of securities companies, most respondents said they "feel hesitant"(42.1%), "not very reliable" (27.9%), and "engaged in aggressive soliciting" (15.2%). 18○ On the other hand, when asked "would you want to purchase risky financial products if
there was someone who could give you advice or help you with the procedures while
understanding your point of view?", 50% of those in their 20s and 40% of those in their30s, and an overall average of 25%, responded that they would like to make apurchase. 19○ Thus, there is a need for a neutral advisor that can fill in the gaps in consumer
knowledge and at the same time can be trusted by the consumer.
○ In the UK, a public institution, "MaPS (The Money and Pensions Service)," wasestablished to provide financial and pension-related information and guidance.
Positioned as a non-governmental public agency, MaPS provides debt advice,information on financial transactions and pensions and consumer protection services
online and over the phone.
○ With reference to the existence MaPS in the UK and systems in other countries, in Japan
as well there is a need for a system in which neutral parties can easily offer consulting
advice on asset formation.
○ Therefore, it is important to promote the visibility of neutral advisors and work toensure that such advisors widely provide high-quality, customer-oriented advice.
Therefore, in 2024, a new public organization will be established to promote financial
and economic education. As a project to improve the environment for the smoothprovision of advice and to train advisors, the organization will provide certification ofneutral advisors and support these advisors in ensuring they continue to provide quality
service.
○ In particular, in order to ensure that advice given by such neutral advisors is widelyavailable to inexperienced investors, the easing of the registration requirements forinvestment advisory businesses (for example, limiting the scope of advice toinstallment-type NISA and iDeCo) will be considered along with the development of anecessary supervisory system.
7. Pillar 4: Enhancing asset formation for employees○ In order to achieve a virtuous cycle of sustainable growth and distribution, to realize
the new form of capitalism advocated by the Kishida administration, and to form abroader middle class, it is important to raise middle-class income levels.
○ Therefore, in order to expand employment income and as part of labor market reforms,
we will simultaneously address three challenges: (1) facilitating labor mobility without
unemployment between companies and industries, which gives employees theopportunity to change jobs to companies and industries with growth potential, (2)investing in people for reskilling (retraining to move to growth fields) and (3) against
this background, structural wage increases.
○ At the same time, we will create a virtuous cycle in which income from financial assets
owned by employees will be increased, and the benefits of sustained improvement incorporate value will extend to households. For this reason, it is necessary to strengthen
asset formation for company-based employees.
○ As employers, companies have a high level of trust among employees, and efforts to
support not only physical and mental health but also economic stability throughcompany actions are spreading around the world to encourage human happiness. In
Japan as well, employers need to promote efforts to improve the economic stability of
their employees.
[Utilization of neutral certified advisors]○ Efforts to support the asset formation of company-based employees have been noted
for having such effects as improving employee satisfaction, elevating employee
retention rates and reducing financial stress. 20 On the other hand, although many
individuals recognize the need to receive advice on asset formation, they lack theopportunity to do so.
○ Therefore, in order to stimulate efforts for economic stability of employees throughcompanies, we will encourage companies to utilize neutral certified advisors in theworkplace.
○ Specifically, we will encourage companies to subsidize employees when they use

neutral certified advisors. In addition, we will promote horizontal development of an
in-house incentive point program (distributing points that can be used for asset
formation and related services to employees) for employees, which some companies
are already implementing. In addition, we will encourage the active use of neutral
certified advisors at sites set up within companies to provide employees with
consultations on asset formation.
[Strengthening company support for asset formation]○ We will consider preferential tax treatment of corporate incentives designed for
employees to invest in workplace installment-type NISA and employee shareholding
associations.
○ Efforts to support asset formation by company-based employees is also important fromthe perspective of a human capital strategy. On the other hand, small and medium-sizedenterprises (SMEs) have not made sufficient progress in their efforts to support asset
formation, so it is necessary to provide a wide range of support, including for SMEs.
Therefore, in order to spread workplace installment-type NISA, corporate-type defined
contribution pension plan and iDeCo among SMEs, we will work to spread thesesystems and consider providing necessary support.
○ Furthermore, as shown in the "Guidelines for Human Capital Visualization" announcedin August this year, corporate efforts to strengthen company-based employee asset
formation are also effective in improving employee engagement. We will also utilize
the Guidelines to encourage companies to actively disclose information on their efforts
to support asset formation of employees.
8. Pillar 5: Enhancing financial and economic education to spread the importance ofstable asset formation[Spreading the importance of stable asset formation]○ While only 7% of people acknowledge that they have received financial and economic
education, more than 70% say that financial and economic education should be
provided, suggesting strong public interest in such education. 21 In addition, 40% cite"lack of knowledge about asset management" as the reason for not engaging in asset
management. In order to spread the importance of stable asset formation to these groups,
it is important to deliver financial and economic education. 22○ In addition, various entities such as the government, the Bank of Japan and industry
groups provide financial and economic education for schools and working adults, butopportunities to receive financial and economic education related to asset formation at
schools and workplaces are limited. Financial business and industry groups are the mainproviders of such education, which causes resistance among recipients.
○ Therefore, along with the business related to the certification of neutral advisors, asmentioned above, the new public organization will be established in 2024 as a neutral
body to strategically implement financial and economic education in which the public
and private sectors act in unity. At that time, the functions of the Central Council for
Financial Services Information, of which the Bank of Japan serves as the secretariat,
will be transferred to and continued by the new organization. Further, along with theJapanese government and the Bank of Japan, the cooperation will be obtained fromprivate organizations, such as the Japanese Bankers Association and Japan Securities
Dealers Association, in developing and establishing an operational structure, andsecuring operating expenses.
○ Led by the new organization for financial and economic education, we will develop apublic relations strategy that appeals widely to the public, along with the enhancementof continuing education for company-based employees and the implementation offinancial and economic education by local governments. Also, efficient and effective
financial and economic education will be implemented nationwide through publicprivate partnerships, such as instructional visits to schools and companies as well as
holding symposiums.
○ We will use the "Financial Literacy Map" and knowledge of behavioral economics asreference.
[Public outreach]○ While making policy efforts to majorly expand NISA, reform the iDeCo system, createa neutral advisory system and enhance financial and economic education, we will also
encourage those who have no investment experience (approximately 80 million people)
to take a step toward asset formation.
○ For this reason, we will formulate a "Fundamental Policy" as a national strategy in order
to comprehensively and systematically promote measures related to asset formation
support for the entire country in cooperation with related government ministries andagencies, local governments and private organizations. In doing so, the Financial
Services Agency will act as the secretariat, promoting cooperation among relevant
ministries and agencies and coordinating measures and conducting follow-up. In
addition, we will establish a forum such as a council to discuss and promote themeasures necessary for asset formation through broad cooperation between the public
and private sectors.

○ The new public organization will actively promote public relations aimed at all
generations, including the dissemination of information on systems such installmenttype NISA, so that individuals can feel closer to investment opportunities.
○ From the stage of making preparations for the establishment of the new organization,
public outreach activities will be carried out through councils and other bodies, with anappropriate division of outreach roles among financial business operators and otherparticipants.
[Collaboration between public pension simulator and private sector services, etc.]○ In April 2022, the "Public Pension Simulator," which helps users easily estimate howmuch pension they will receive in future, has been tentatively launched. In the future,by promoting cooperation with private sector services, it is expected that the users caneasily check one’s own financial assets and the expected amount of future pension
payments through apps and other online services operated by private businesses. In
addition, analysis and management advice for owned assets will be provided on
smartphones, to enable citizens to easily supervise and manage their assets. For thisreason, in the current fiscal year we will conduct operational test on how to collaborate
between the public pension simulator and private sector services.
9. Pillar 6: Realization of an international financial center open to the world○ Investors and asset management firms are looking for channels amid the movement toreview business continuity plans (BCPs) triggered by the COVID-19 pandemic andgiven the geopolitical uncertainties in East Asia.
○ Amid these circumstances, Japan has a safe and secure living and business environment
supported by a stable democracy and the rule of law, as well as a large real economy, astock market and 2,000 trillion yen in household financial assets. Taking full advantage
of Japan's strengths, we have an opportunity to secure Japan’s position as an"international financial hub for the world and Asia," contributing to the development of
the economies of Asia and Japan by smoothly absorbing and providing growth funds
from around the world.
○ To this end, we will comprehensively promote (1) revitalization of the financial andcapital markets that will contribute to new growth, (2) globalization of financial
administration and tax systems and (3) improvement of the living and businessenvironment that supports highly skilled foreign workers and the effective
dissemination of information.
[Stimulation of financial and capital markets]

○ We will work to stimulate the financial and capital markets by facilitating the supply offunds that contribute to growth through startups and the resolution of social issues suchas ESG, promoting corporate disclosure and corporate governance, strengthening
market infrastructure and regulatory reform, among other measures.
(1) Support for startups○ In Japan, although the number of listed companies is increasing, there is an issue often
pointed out that their corporate values get stagnant after being listed, so-called "goal ofgoing public. "For this reason, in order for startups to attract funds from investors andgrow without taking an option of going public, it is important to make it possible forexisting shareholders to easily trade their unlisted stocks in the secondary markets. It isalso important to support private-sector-led efforts to encourage unlisted companies toappropriately manage the list of shareholders, which is essential for conducting
secondary transactions. Currently, securities companies are not allowed to operate
Proprietary Trading Systems (PTSs) for unlisted securities for professional investors.
To enable professional investors to trade unlisted stocks so that startups can growwithout going public, we will amend the relevant cabinet ordinance of the Financial
Instruments and Exchange Act within FY 2023.
○ In order to promote M&A, which is an exit strategy for startups to significantly growunder the umbrella of a business company, tax measures, limited to those that will
particularly contribute to the growth of startups, under the open innovation tax system
will be provided for the acquisition of existing shares that have been issued. In doingso, sufficiently effective tax measures will be adopted.
(2) Stimulation of the ESG bond market, etc.
○ The amount of global issuance of ESG bonds is rapidly increasing (from 200 billion
dollars in 2018 to 1.2 trillion dollars in 2021) in response to the growing global interestin environmental issues in recent years. 23 In Japan as well, the amount of domestic
issuance is increasing (from 500 billion yen in 2018 to 2.9 trillion yen in 2021), 24 but
considering the scale of the economy, there is a lot of room for further utilization ofthese bonds.
○ In addition, since the price correlation of ESG bonds with traditional investment choices
such as stocks is low, for investors these bonds can be an effective option for risk
reduction through diversified investment, and there is little room to hold down
premiums under low interest rates. At the same time, it should be noted that if interest
rates rise, the benefits of issuing green bonds may increase.
○ In order to steadily increase the amount of ESG bonds issued, it is necessary to visualizesustainability efforts such as the use of proceeds (project details), fund management,utilization results/evaluation and corporate emissions, and to increase the credibility ofgreen bonds and transition bonds (bonds whose proceeds are used for investments intransitions to decarbonization). To this end, the Ministry of the Environment will further
expand the current guidelines, establish a corporate data platform in collaboration with
the Japan Exchange Group (JPX), improve the environment for facilitating transition
finance (improving sector-specific technology roadmaps) and further enhance
disclosure regulations. Also, we will encourage efforts to expand ESG products withcapital characteristics.
○ In addition, the Financial Services Agency will issue basic guidelines by June next year
to expand "impact investment," which is aimed at broadly resolving societal issues not
only providing economic benefits, including investment in social fields and investments
in innovation.
(3) Investment in human capital○ From the perspective of promoting constructive dialogues between investors andcompanies and supporting corporate governance reform, it is also important to makeefforts to enhance disclosure of corporate information.
○ In order to focus on how information on human capital should be disclosed, in August
we published the "Guidelines for Human Capital Visualization" as a comprehensive
guide for organizing the direction to be taken. Efforts will be made to disseminate theseguidelines, to encourage companies to actively utilize them in accordance with theirown industries, business models and strategies, and to accelerate effective investment
in human capital by deepening a mutual understanding among stakeholders that
includes managers, investors and employees about how investment in human capitalcan be a source of long-term profit expansion.
○ Furthermore, for increasing corporate value over the mid- to long-term, we will
promote the development of disclosure standards related to human capital and theenhancement of sustainability information disclosure, as well as lead the formation ofinternational standards.
(4) Corporate governance reforms○ Corporate governance reforms have progressed significantly over the past 10 years byformulating and revising the Stewardship Code and the Corporate Governance Code.
However, further efforts should be made to make corporate governance reform more
substantial in order to achieve companies' sustainable growth and increase corporate
value over the mid- to long-term.

○ Therefore, we have established a forum to hear a wide range of opinions fromstakeholders, including overseas investors. In the spring of 2023, we will compile an"Action Program" to promote corporate governance reform in terms of substance.
(5) Enhancing market infrastructure○ We will work to enhance the functioning of the market as a whole through addressing
issues relevant to the easing of the upper limit for transactions at PTSs. In addition,
financial instruments exchanges including the Tokyo Stock Exchange will encourage
listed companies with a large amount of investment units of their stocks to reduce theamount of investment units.
(6) Revision of regulations on firewalls between banks and securities companies○ Regarding regulations on firewalls between banks and securities companies, one
example is that it is prohibited to share bank customer information with group securities
companies without individual agreement, which has viewed as a hindrance tobusinesses that seek to take advantage of digital strengths, such as information sharing
and targeting. Given this situation, in regard to regulations on the transfer of customer
information, in June this year it became possible to share information among banks andsecurities companies without the prior consent of customers, with the practice limited
to listed companies.
○ In the interest of promoting efforts to strengthen financial functions, such as making iteasier to provide products and services that truly meet individual customer needs
through maximizing the power of digital technology, we will consider how firewalls
between banks and securities should be regulated and the kind of necessary regulatory
response, while giving consideration to ensuring appropriate customer information
management and the prevention of abuse of a dominant bargaining position.
[Globalization of financial administration and tax systems]○ In order to become "the Japanese market that is the choice of the world," we will aim
for the highest level of administrative and support systems that can be said to follow
best practices in light of global standards and a market that boasts the highest level ofaccessibility for financial-related human resources from around the world, andeffectively communicate this. This will also contribute to improving Japan’s domestic
investment environment for domestic investors.
○ To this end, first we will actively approach overseas business operators to listen to theirneeds and expand public relations channels such as major overseas media, while always
accurately identifying underlying needs and challenges related to business expansion

into Japan. Also, we will effectively and strategically expand PR channels for major
overseas media and enhance a dedicated website for the "international financial center".
○ We will strengthen the functions and structure of the "Financial Market Entry Office,"
which was newly established last year to enable registration and supervisory processes
in English, and provide closer support to overseas financial operators, such as
government administrative services and credit guarantees.
○ In addition, as we promote efforts to become an "international financial center," it isundeniable that Japan's tax burden is a weakness, although it is fundamentally different
from the tax situation in countries and regions such as Hong Kong and Singapore. For
this reason, revisions to the taxation system related to executive remuneration at asset
management firms and revisions to inheritance tax imposition on highly skilled foreign
financial-related professionals have already been made. However, we will identify thetax system issues starting with those seen as barriers to entry into Japan from theperspective of highly skilled overseas financial-related human resources and financial
business operators, as well as the various tax issues associated with becoming an"international financial center," and take measures to make necessary revisions.
[Improvement of the living and business environment to support highly skilled foreign
financial-related human resources]○ We will improve the living and business environment to support foreign nationals withadvanced financial skills, including by encouraging financial institutions to facilitateprocedures for them to open a bank account, which is essential to starting up a life andbusinesses.
10. Pillar 7: Ensuring customer-oriented business conduct○ In order to bring about stable household-based asset formation, it is important to realize
a "virtuous circle of funds" in which the fruits of growth are distributed to households.
Therefore, it is necessary for each participant in the investment chain, in whichcustomers and beneficiaries make investments in investee companies and dividends
accompanying improvements in investment value are returned to households, to fully
perform their expected functions. For this reason, we will create an environment toencourage financial services providers and those involved in the operation of corporate
pension systems to institute a cross-section of necessary measures to establish and raise
the level of initiatives that are in the best interests of customers.
○ With regard to sales companies, it has been noted that they may be selling products
whose risks are difficult to understand and costs may not be reasonable compared to
expected returns. It is important to provide financial products that meet the needs ofinvestors in an easy-to-understand manner, including for inexperienced investors. For
this reason, companies need to operate in the best interests of customers. Also, we willfurther strengthen the promotion of "customer-oriented business conduct" by urging
that the costs, such as commissions, of financial products, including insurance, and thepossibility of conflicts of interests be made visible through rule-making and otherprocesses.
○ It has been noted that asset management firms and financial product structuring
companies are creating and managing financial products that prioritize sales promotion
rather than customers. Under an appropriate governance and management system, we
will review the "Principles for Customer-Oriented Business Conduct" and develop
necessary rules in order to 1) properly allocate human resources having true expertise(abandon the dispatch of personnel from the parent company) and set appropriate duties
and remuneration for such human resources and 2) thoroughly implement governancefor product development, sales and analysis of results from the customer's point of view,
and increase the sophistication of customer-oriented product composition, sales andoperations.
○ In the interest of maximizing benefits for beneficiaries, asset owners (including
corporate pensions) need to strive to achieve appropriate investment returns based on
the nature and scale of their assets. For this reason, the relevant government ministries
and agencies will work together to develop a system for continuous dialogue with awide range of stakeholders, and promote measures to improve operations, such as
implementing survey-based research related to operational systems and methods andsharing and disseminating best practices.
End of Document

<Sources and Annotations>
1

Japan Securities Dealers Association

2

As of end of June 2022, "NISA/Junior NISA Usage Survey,” Financial Services Agency

3

As of end of June 2022, "NISA/Junior NISA Usage Survey," Financial Services Agency

4"Results of Customer Awareness Survey on Sales of Risky Financial Products," Financial Services

Agency5

As of end of June 2022, "NISA/Junior NISA Usage Survey," Financial Services Agency

6

Japan Securities Dealers Association

7"NISA/Junior NISA Usage Survey," Financial Services Agency.

8“FY 2021 Survey Report on Citizen Usage of NISA” (June 2022), Japan Securities Dealers Association

and Japan Exchange Group9“FY 2021 Survey Report on Citizen Usage of NISA” (June 2022), Japan Securities Dealers Association

and Japan Exchange Group10"NISA Account Usage Survey (as of end of December 2021)," Financial Services Agency

11"Public Opinion Survey on Financial Behavior of Households [Survey of Households with Two orMore Persons] 2021 Survey Results," Central Council for Financial Services Information
12 "2021

Individual Investor Attitude Survey on Securities Investment," Japan Securities Dealers

Association
13“Research Group Report on Fundamental Conditions for Asset Formation for Retirement in Japan,”

Research Institute for Policies on Pension & Aging (a public interest incorporated foundation)
14"iDeCo Participant Survey 2021, Survey Report Summary-Reality of iDeCo Celebrating 20 Years of

System Implementation,"

Defined Contribution Pension Education Association (a non-profit

corporation)
15

As of end of March 2022, National Pension Fund Association

16

As of end of March 2022, Ministry of Health, Labor and Welfare

17"National Survey on Securities Investment (FY 2021)," Japan Securities Dealers Association

18"National Survey on Securities Investment (FY 2021)," Japan Securities Dealers Association

19 "Results of Customer Awareness Survey on Sales of Risky Financial Products (June 30, 2021),"

Financial Services Agency
202020 EBRI Financial Wellbeing Employer Survey: October 22, 2020 EBRI ISSUE BRIEF No.515、Haruka Urata, "Money Education Utilizing Workplaces and the Role of Defined Contribution Pensions?"
2020 EBRI Financial Wellbeing Employer Survey: October 22, 2020 EBRI ISSUE BRIEF No. 515
21"’Financial Literacy Survey’ Results," Central Financial Information Commission

22"Results of Customer Awareness Survey on Sales of Risky Financial Products," Financial Services

Agency23

BloombergNEF「Sustainable debt issued ($bn) by instrument type」“Sustainable debt issued ($bn)

by instrument type,” BloombergNEF
24"Issuance Status of SDGs Bonds," Japan Securities Dealers Association