助成

Institute forInternational Policy Studies
・Tokyo・

IIPS International Conference“Reidentifying Japan for the 21st Century”
Tokyo, October 27-28, 2004

“Japan’s Financial “Brand” for the 21st Century”
By
Prof. William Grimes
Professor
Department of International Relations
Boston University
USJapan’s Financial “Brand” for the 21st Century
Discussion Paper
William W. Grimes
Associate Professor
Department of International Relations
Boston University
To discuss Japan’s state “brand,” there are several questions that we must first
address: What do we mean by a state’s “brand”? Who is the audience? And what are
the goals of “brand management”? While these are fairly straightforward questions formarketers of consumer products, they are much more complex for states or nations.
The Concept of a National “Brand”
Several important differences between states and firms can be identified that
profoundly affect the ability of a state to create and manage its “brand.” For example,
contemporary marketers have the option of “narrowcasting,” of focusing advertising or
public relations campaigns at specific groups. If contradictory messages are delivered todifferent groups of consumers, there is not necessarily a problem, whereas states’
reputations are far more vulnerable to charges of cynicism or hypocrisy. Also,
commercial brand management addresses a rather limited set of attributes of the productor firm – for example, the quality of its goods or services, its trendiness, and perhaps the
ethicality of its actions. States not only have a myriad of functions that may often
contradict one another rather than create a single unified image, but their images are also
primarily shaped by the actions of their citizens, firms, and other societal entities. The
major implications of these facts are that states must seek to promote “brands” that reflectreality, and that we must be humble in believing that they have very much control over
the ways in which they are perceived.
Nonetheless, this is an important exercise. From an academic perspective, both
empirical and theoretical developments suggest the importance of a state’s “brand.”Constructivist theories of international relations and empirical studies of psychology tellus that perceptions matter, and they often matter in ways that are not purely rational. In
interpreting the action of another actor (whether a person, organization, or state), people
tend to have a coherent picture of that actor’s preferences, capabilities, and intentions,from which they derive the meaning of the action. In the current U.S. election campaign,for example, those who see President Bush as a strong and determined leader are apt tosee his continued equation of the war on terrorism with the war on Iraq as evidence offocus and consistency, whereas those who see him as a rigid ideologue find confirmationof their negative opinions of him in the same statements. When we raise internationallysensitive issues for Japan such as history textbooks, prime ministerial visits to Yasukuni
Shrine, or Chinese policemen’s violation of the Japanese Consulate in Shenzhen, we canimagine how prior assumptions of intentions – in other words, states’ “brands” – can leadto very different interpretations and thus responses.

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Disturbingly, people tend to be highly selective in how they amend our
perceptions. Ideally, a rational actor would respond equally to information that supports
or questions his model of another actor or situation. In fact, experimental evidence
demonstrates that people tend to pay more attention to information that confirms their
existing beliefs, while rationalizing away information that goes against them. In terms ofinternational relations, many studies have confirmed the common-sense notion that
reputations matter. However, this is not necessarily good news. As some studies haveshown, the persistence of reputations can perpetuate conflict, and eliminate opportunities
for reducing tensions. There is some evidence that this dynamic characterizes the IsraeliPalestinian dispute, for example. When one side becomes more aggressive, thisreinforces the other’s belief that it is dealing with an inherently aggressive opponent,
which can only be dealt with by violence. However, when one side is more conciliatory,
this is often seen as evidence of weakness, and so the logical reaction is again violence.
Leaving aside the obviously important issues of historical memory and ethnic hatred, we
can see the difficulties of dialing down the level of open hostility in such a situation.
This example highlights both the potential dangers of mutual negative perceptions andthe difficulty in changing one’s own negative reputation.
Japan’s “Brand” – Goals and Audience
While it would be interesting to discuss much more deeply the general issues
involved in perceptions and state “brands,” I think that I should return to the issue that
was assigned to me, of what Japan’s financial “brand” should be for the 21st century. This
also brings us back to the questions that I raised in the beginning of this discussion paper.
First, what does the Japanese government hope to achieve by refining its “brand”? Is it
meant to support the effort to become a permanent member of the UN Security Council?
To make the Japanese people more proud of themselves? To make other governments
more willing to change their economic policies in ways that will benefit Japanese people
and firms? My own preference is to avoid grandiose and unlikely aims such aspermanent membership in the UNSC – far too much time and money in the form of
PKOs and redirection of development aid have been spent by Japan over the last dozen
years in vain efforts to show that Japan is “worthy” of membership. Similarly, pride inbeing Japanese, or even popularity in the world, strikes me as a misuse of the finite
resources of the state. Thus, to me the purpose of this exercise is to promote economic
cooperation where mutual interests exist.
The related question is that of audience. Should efforts to promote a Japanese“brand” focus on the United States, the “West,” its major economic partners, East Asia,
or the world more broadly? Moreover, should Japan be focusing on elites or populaces,
government officials or private sectors? While the answers are not obvious, I think thebasic criterion is a simple one: Japan should focus its efforts on changing thoseperceptions that are creating the greatest obstacles to mutual economic benefit.
At the moment, I do not see any particular ways in which either elite or popular
perceptions of Japan in the United States and Europe are creating serious obstacles tomutual economic benefit. There is certainly a dismissive attitude toward Japanesepolitics and the Japanese financial system that may have some effects. But trade andinvestment opportunities are open in both directions, and extensive integration andcooperation suggest that mutual images are not currently a major problem.

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The more serious issue is to be found in East Asia. There, although economic
integration has proceeded at an impressive pace over the last twenty, and particularly lastten, years, deep mutual suspicions and lack of trust pervade perceptions of the Japanesestate, the Japanese people, and Japanese corporations. Moreover, since there issignificantly more to be done in terms of both lowering barriers to trade and investment
and achieving deeper integration, these perceptions have potentially far more negative
ramifications.
The most serious weakness of the Japanese “brand” in East Asia has to do withhistorical memory of the Pacific War and – for China and Korea – the colonial period.
The “brand” image that emerges from historical memories is that the Japanese people andgovernment are ruthless, predatory, and entirely self-interested. Such feelings are to befound among both elites and general populaces, although different countries present
different patterns. Perhaps the most dangerous pattern is to be seen in China, where thestate has effectively managed the latent anti-Japanese sentiment of many citizens tolegitimize its own monopoly on power.
What Should Japan’s “Brand” Be?
Clearly, economic policies have limited ability to overcome historical memory,especially when bitter feelings are cynically exploited by governments. Nevertheless,some actions can be important in changing perceptions in cases where Japan’s economic
profile is seen as confirming the vision of self-interest and predation. When Japanese
economic aid is acknowledged in infrastructural or welfare-enhancing projects, or when
Japanese firms are seen to be more attractive workplaces than firms based locally or inother foreign countries, the negative images can be reduced.
At least as important is what this conference is trying to do: To create a positive
counter-image that has more truth to it than existing negative images. To be effective,
such a counter-image, or “brand,” must be a reasonable approximation of reality, must be
attractive to the audience, and must differentiate Japan from potentially competing
national “brands,” such as the United States, European Union, or other East Asian
countries.
In the 1980s, Japan’s “brand” was clear and attractive, and helped to significantly
reduce anti-Japanese sentiment and policies throughout East and Southeast Asia. Japanwas seen as economically powerful and dynamic, and the creator of a developmentalist
alternative to a declining and often dogmatic United States. The Ministry of International
Trade and Industry (MITI; now the Ministry of Economy, Trade, and Industry, or METI)
resurrected the pre-war concept of regional development as a “flying geese” pattern, in
which Japanese industrial development helped to smooth the way for follower economies(South Korea and Taiwan in the first tier, Malaysia and Thailand in the second, and soon). While some Asians worried about the hierarchy implied in the “flying geese” model,
and others feared an economic version of the “Greater East Asia Co-Prosperity Zone” ofthe Pacific War period, for the most part this “brand” was a positive one. At the popularlevel, many people and firms saw that they could make money and improve their lives byworking with Japanese firms. At the elite level, a number of governments saw
opportunities to advance industrial development in ways that Western governments andinternational financial institutions would not have approved. Most emblematic of thiswas the Malaysian “Look East” campaign of the early 1980s, but other examples could3also be seen (including such failed concepts as Jose Concepcion’s proposal to create a
Philippine “DITI” to mimic Japan’s MITI in the late 1980s). As Asian and Western
scholars, journalists, and policy makers increasingly debated the existence of an “EastAsian model” to be found in Japan and in the “Four Tigers” of South Korea, Taiwan,
Hong Kong, and Singapore, Japan’s economic “brand” gained cachet and value.
Now, unfortunately, both that “brand” and the economic system that it
represented have come into some disrepute. The crash of Japan’s bubble, a dozen yearsof disappointing economic growth, the bankruptcies and takeovers of major Japanesefirms, the extended weakness of Japanese banks, sky-high fiscal deficits, and a host ofother difficulties have considerably dimmed the luster of the Japanese “miracle.” In theWest, the problems of other East Asian economies in the 1997-98 Asian Financial Crisis
only confirmed the negative perceptions of the Japanese developmental “brand.”But while the travails of the Japanese economy and the disaster of the Asian
Financial Crisis have sullied the image of Japan’s economic “brand,” I believe that there
is a real opportunity now for Japan to redefine that “brand” in a way that will reflect its
considerable economic strengths and also distinguish itself from the United States or theEuropean powers. To some extent, this will require some substantive shifts within theJapanese economy. But for the most part, some subtle redefinition, along with somereorientation of government policies to support the redefinition, should be sufficient.
Best of all, I believe that the next few years offer Japan an opportunity to better align its“brand” with its interests, which in turn could offer significant economic and political
returns in East Asia and perhaps more globally as well.
The broad contours of the redefined “brand” follow those of the 1980s version,
with the addition of some of the principles enunciated by the Japanese government in the
Asian Financial Crisis:•Japan should be seen as a large, powerful, technologically innovative economy
with a strong global orientation.
•Japanese firms should be seen as the “indispensable partner” for regional
production networks.
•The Japanese government should be the place for regional governments to go forinnovative public projects and cooperative arrangements.
•Japan should be the model for a new developmentalist model that combines deep
integration into the world economy with pragmatic protections from the dangers
of financial globalization such as limited capital controls.
In all, this is a vision of Japan as offering a pragmatic alternative to the so-called“Washington Consensus.” As I have put it elsewhere, it puts Japan in the position of
defending “economic policy pluralism” against the universalizing tendencies ofglobalization.
Instituting Japan’s “Brand”
Any successful “brand” must not only be attractive to the external audience, butalso must be a reasonable reflection of reality. In order for elite and popular audiences in
East Asia accept the proposed “brand,” Japan will need to make efforts in three separate
but related areas of finance: reinvigoration at home, regional level initiatives forfinancial stability, and promoting financial development in the region. Its extremely
large pool of net savings means that Japan has much to offer its neighbors from a4

financial perspective. Moreover, the need for Japan to achieve high returns to pay for its
aging society means that this is an urgent task for Japan’s national welfare as well as its
national prestige. For the moment, at least, Japan’s large net creditor position strengthens
its hand.
Financial Reinvigoration at Home
Undoubtedly the most important part of any effort to promote an attractive
financial “brand” for Japan will be to have a strong and attractive economy and financial
system. This is, of course, an important goal for Japan in any event, but it is hardly wortheven discussing a “brand” unless Japanese firms, financial institutions, and markets are
dynamic and successful.
Clearly, this is an excessively broad topic for a paper and conference of thisnature. So what I will do here is to break it down to three major financial issues that are a
drag on the Japanese economy and on outsiders’ perceptions of the Japanese economy:banking regulation, the postal savings system, and the unattractiveness of the Tokyofinancial markets.
The problems of the Japanese banking system in the post-bubble period haveconstituted the greatest drag on both the Japanese economy and its image abroad. Yearsof opaque and inefficient management, regulation, and supervision contributed to
extraordinary levels of non-performing loans (NPLs), financial institution bankruptcies,
and the constant suspicion that even worse results were being concealed. The repeatedmistakes on the part of both bank managers and regulators have destroyed the credibilityof Japan as a potential role model for other countries in the region and have reduced theinfluence of Japanese banks as funding sources for businesses and governments.
Japan can become the role model for adapting a relationship-based banking
system to deal with the challenges of financial and manufacturing globalization, but it is
not there yet. Certainly, there have been important reforms and improvements overrecent years. In the last year and a half, major banks have finally achieved large
reductions in their NPL holdings and improvements in capitalization. Moreover, banking
regulation has largely caught up with the “free, fair, and open” goals of the Big Bang, andsupervision has become more consistent and transparent. Nonetheless, a number ofmajor concerns remain. Many regional banks remain weak, and the mega-banks createdby mergers over the last five years or so often suffer from muddled business plans, excess
staffing, and weak profitability. Moreover, some of the high-profile actions by regulators– including the de facto government takeover of Resona Bank, pressures on Shinsei Bank
to increase its lending to small businesses, and the way in which rival bids for UFJ Bank
were handled just last month – have created concern that arbitrariness and nontransparency have not been fully eliminated from the system.
The simple fact is that Japanese banks must service increasingly sophisticatedfirms in an increasingly globalized world. Given the retreat from international operations
by many Japanese banks and the weakness of Tokyo as an international financial market,
this will mean primarily servicing Japanese firms for the time being, but the principle
remains the same. Banks and other financial institutions will thrive only by providing
effective risk management services for Japanese firms with global interests (including
hedging against currency movements, maturity mismatches, etc.) and participating in thecreation and marketing of products that offer them higher returns and lower risks than5

traditional banking services (for example, establishing a highly liquid market in assetbacked securities). It is undoubtedly possible to continue to emphasize long-term
relationships and to fulfill traditional tasks such as heavy involvement in project financethat have created a Japanese “brand” of financial services over the years, but the tools
must adapt to changed circumstances. If Japanese banks are then able to reenterinternational finance from a position of technical and financial strength, then the Japanesefinancial “brand” should make them very attractive counterparts for many growing firmsin Asia.
While much of the discussion surrounding reinvigoration of the domestic
financial system has focused on mistakes in regulation and supervision, another key
aspect of the Japanese government’s responsibility for reinvigoration is to be found in the
postal savings system. With about a third of Japan’s savings deposits and about forty
percent of its term life policies (through kanpo), postal savings is by far the largest
financial institution in the world. It is also highly inefficient, politically protected, anddistortionary. While current political debate centers on how to improve its efficiency, to
my mind it should simply be eliminated. Even if it becomes an efficient financial
institution whose lending practices reflect responsible risk assessment and whose
management seeks to implement best practices, it will have the ability to compete
unfairly with other financial institutions based on its sheer size, tax-free status, subsidized
branch network, implicit yet costless deposit and insurance policy guarantees, supervisionby more lenient regulators, and intimate political connections. Postal savings is a threat
to Japan’s financial system and a symbol of lack of accountability of government
spending that can only weaken Japan’s “brand” as a financial leader.
The final point I would like to make with regard to Japan’s domestic financial
system is the continuing parochialism of its capital markets. It is certainly true that there
has been substantially increased foreign participation in the stock market, and foreign
financial firms are major players in the Tokyo markets for a variety of products.
Moreover, some Japanese firms are major players in global capital markets. However,Tokyo remains a essentially “local” market, which does very little business that is notdirectly related to either Japanese firms or Japanese financial institutions. In many ways,
it is less of an international market than Hong Kong or Singapore, and it lags far behind
New York and London in that regard.
This parochialism creates several problems for Japan in its quest to again become
a global or at least regional financial leader. For one thing, it contributes to the tendency
of Japanese savings to be invested domestically (often for disappointingly low returns) or
to be recycled through New York or London by more sophisticated foreign institutions.
It also inhibits the use of the yen as a serious reserve currency for regional governments.
While significant improvements have been made in the openness and technical efficiencyof Tokyo’s markets, weaknesses in the government bond and asset-backed securities
markets make it difficult to pursue sophisticated risk management operations without
going abroad for a significant portion.
Altogether, it is clear that Japan’s financial markets are not yet ready to fully
support a vigorous and attractive financial “brand.” The problems of the banks and otherfinancial institutions make it hard to look to any that could be seen as leaders ininternational or regional finance. Continuing concerns about regulation and postal
savings mean that the system itself has limited luster. And the fact that Tokyo markets

6are for the most part bypassed even by regional governments and firms in their
participation in global capital markets lessens Japan’s perceived relevance in this respect.
This makes it unlikely that the yen will seriously challenge the position of the dollar in
East Asia in the near future, despite its huge net creditor position. (The Chinese renminbi,of course, will not be able to have an international role for many years to come, given
China’s capital controls, lack of financial development, and its position as a developing
economy.) Fortunately, the key to renewing Japan’s prestige in this regard is exactly
what the Japanese public and private sectors should be doing for the sake of Japan’s own
economy.
Promoting Regional Stability
One of Japan’s great strengths in its regional financial “brand” derives from its
actions in the context and aftermath of the Asian Financial Crisis. Its support for
threatened neighbors has opened up an important window of opportunity in building up a
more attractive image that will help to improve the likelihood of public and private
cooperation for mutual economic gains.
Although most American analysts would not agree with me, I am convinced that
the Japanese government was one of the few heroes of the Asian Financial Crisis.
Starting with the Thai crisis, Japan was the first major actor to recognize that the crux ofthe problem was liquidity rather than fundamentals of the Thai economy. (This is not to
say that there were no fundamental problems in the Thai or other crisis economies – there
clearly were. However, they did not explain either the timing or the extent of the crises.)
It was the largest bilateral contributor to each of the IMF-led packages. It created a
special fund within the Asian Development Bank to deal with potential contagion issues.
In 1998, the New Miyazawa Initiative sought to increase the amount of funding available
to affected economies both through increased aid and by supporting private capital flows
with bond guarantees. In the aftermath of the crisis, several of Japan’s proposals forreforming IMF procedures were adopted, increasing the amount of funds that could be
released to member countries in future crises. Perhaps most famously – although, I am
convinced, foolishly – it called for the establishment of a $100 billion Asian Monetary
Fund that could potentially have rivaled the International Monetary Fund’s role in dealing
with future regional currency crisis. After this proposal was roundly defeated, a more
limited arrangement to promote currency stability was created in the Chiang Mai
Initiative (CMI). Interestingly, the current ASEAN+3 efforts have not drawn the expected
opposition from the United States, probably because the U.S. government no longer sees
the Japanese financial “brand” as a threat to its own.
I believe that there are several important results to be seen in these events that are
relevant for Japan’s financial “brand.” First is that the Japanese government moved
boldly in putting forward an interpretation of the situation that was not only highly
attractive to crisis countries, but also supported by fiscal and political actions. The
strength of the Japanese government’s convictions motivated changes in IMF and ADB
procedures and may have had some effect in prompting a more positive response by theUnited States to the Korean and Indonesian crisis than it had shown in the Thai situation.
Japan’s stance was seen as brave and supportive in much of East Asia, and its willingness
to put up large amounts of money to help its neighbors certainly caught their attention as
well.

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This illustrates the second point: that these actions by the Japanese government(although not really supported by the private sector) helped to shift the mindset among
many in Southeast Asia and South Korea that Japan’s activities in the region were purely
selfish or even predatory. It helps that the AMF proposal and Chiang Mai Initiative were
designed to fit Japan’s emerging “brand” – in particular, the expectation that each country
should be able to choose its own approach to financial globalization and domestic
economic policies. Collective arrangements like the CMI (and especially the AMF) aremeant to protect such individual approaches from externally-driven market pressures.
The third lesson has been that there is at least a limited willingness to accept
Japanese leadership in financial matters. I do not want to minimize the importance ofChina as either a sticking point (as in the AMF proposal) or facilitator (as in the Chiang
Mai Initiative) for Japanese or Japanese-inspired financial arrangements. But theregional currency arrangements and financial cooperation that now exist through theASEAN+3 and particularly the Chiang Mai Initiative are the result of Japanese initiativeand generally reflect the interests and concerns of the Japanese government. There are, I
believe, some rather important flaws to the current arrangements, but it is hard not to seethem as a triumph for a Japanese vision and thus for Japan’s financial “brand.”As part of its international “brand” management, I believe that Japan should
continue in the path of regional institutionalization. Expansion of Chiang Mai Initiative
swap lines is less important than improving the institutional arrangements surrounding
them. For now, activation of CMI swaps has largely been delegated to the IMF, as major
creditors like Japan worried about both the potential negative reaction of the IMF andUnited States and the possibility of having to bail out economies that had acted
irresponsibly. However, there is certainly some regional sentiment in favor of returning
greater discretion to ASEAN+3 member states. In order for that to be consideredseriously, it would be necessary to improve regional surveillance and moral suasion overfinancial policies in order to reduce the likelihood of unnecessary crises.
Perhaps more importantly, Japan could use the leverage of reducing IMF powerover swap lines to push forward the kind of surveillance and moral suasion that would
allow it to shape regional financial systems to its own (and of course the region’s) benefit.
So far, there has been relatively little done to improve the quality of regional surveillance.
This is somewhat ironic, given early efforts by the Japanese-sponsored ADB Institute andothers to create a set of indicators that would be regionally specific in predicting future
Asian crises. If those efforts are serious and actually bear fruit, surveillance based onthem could become a useful tool for Japan in promoting a stable, prosperous region that
respects the contexts existing in each country rather than promoting rapid capital
liberalization in an indiscriminate manner. Such economic policy pluralism is a keystoneof Japan’s post-developmentalist alternative to U.S.-led globalization. Even if theultimate goal is to have national financial systems converge in terms of regulation andopenness to global money, Japan can have a role in shaping the sequencing and timing
leading up to that final point. For example, the Japanese government has been rather
supportive of the maintenance of some capital controls in Malaysia and China. This
reflects its own prioritization of liberalization compared to other goals, as well as its
position that each country should choose its own pace of financial liberalization.
Before leaving this topic, it should be useful to make one last point about theways in which Japan can help regional governments to create systems of financial

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regulation and supervision that will be more effective and more stable, as well ascompatible with the interests of Japanese firms and financial institutions. At least sincethe 1980s, the Japanese government has offered advice and training on financial systemmanagement and fiscal and tax systems to other countries through the Ministry of
Finance think tank and related private-sector organizations. However, such programs
have lost a great deal of credibility in the face of Japan’s financial and fiscal problems
over the last dozen years. But if efforts to clean up the domestic problems are successful,
such programs will be a useful adjunct to the ASEAN+3 efforts noted above.
All these efforts could also be complementary to a reinvigorated APEC if thatorganization were to regain relevance. Indeed, I would suggest that these measureswould strengthen Japan’s hand to shape the agenda of APEC. However, it is important tonote that positive leadership in financial issues will not excuse Japanese intransigence inissues such as agriculture. Having allowed its protected agricultural sector to sink
APEC’s Early Voluntary Sectoral Liberalization efforts in the 1990s, the Japanese
government should certainly be wary of injuring its financial “brand” with such an illconsidered linkage.
Regional Financial Development – An Asian Bond Market?
While there is much that can be done to help develop regional capital markets
using the leverage of the Chiang Mai Initiative and by offering aid and advice to financial
regulators within other Asian countries, I believe that there are inherent limitations toJapan’s ability to force the development of markets that would benefit it. This can beseen in two initiatives of the last several years.
The first is the multi-year and multifaceted efforts to promote internationalizationof the yen. While many if not most of the specific policy initiatives in this regard havebeen positive for both the Japanese economy and Japan’s “brand” (for example,
liberalization of the Japanese government bond and bill markets, changed rules on tax
withholding for foreign investors, and efforts to improve clearance systems), others arecounter-productive. These include policies that have sought to impose use of the yen on
individual firms or countries even when they would prefer to use dollars or euros or local
currency. Internationalization of the yen is a goal that will not work if it is not marketdriven; moreover, efforts to force yen-based transactions on neighbors will not contributeto a positive image of Japan’s “brand.”The second is the Asian Bond Market proposal that has been put forward by theJapanese Ministry of Finance. The goal of the proposal is to create regional capital
markets denominated in regional currencies in order to allow East Asians’ savings tofinance projects within East Asia without going through New York or London markets.
While the goal is an attractive one, the existing proposals are excessively complicated,
excessively interventionist, and potentially a serious waste of government resources.
Moreover, they are extremely unlikely to work. To my mind, it would be a sadsquandering of Japan’s tax money and hard-won regional “brand” to pursue this scheme.
The point here is that initiatives must reflect real possibilities as well as theprinciples on which Japan’s “brand” is to be based. As Japan’s own economy becomes
more and more globalized and market-oriented, so must its policy initiatives.
Summing Up

9This discussion paper has sought to do three things. First, it has considered theconcept of a state or national “brand” from a general perspective, and to draw out someguidelines for thinking about the determination and implementation of a financial“brand” for Japan. Second, it has suggested a feasible and attractive “brand” that will
promote Japanese policy goals. Third, it has considered some of the elements andobstacles to establishing this “brand.”A discussion paper of this length inevitably raises more questions than it answers,
and leaves a great deal of important territory unaddressed. For example, I have focusedon Japan’s regional “brand” largely to the exclusion of its role as a global player. I
believe this can be justified partly by the more substantial opportunity costs of Japan’scurrent “brand” in East Asia than elsewhere in the world, as noted earlier. Moreover, I
believe that a strong case can be made that Japan’s regional identity will increasingly
define its ability to sway Western governments and multilateral organizations – thewillingness of the IMF and United States to consider Japanese reform proposals in thewake of the AMF episode certainly suggests that Japan can derive strength in the worldfrom greater strength in the region.
Despite the inherent limitations of a paper such as this, however, I do hope that it
will be able to generate useful debate that will improve Japan’s ability to promote its
national interests in the financial sphere. I very much appreciate the opportunity toparticipate.

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