to operate supra - national governance. therefore, asian regional collaboration does not have a lead player a priori. instead, a variety of players are involved. in fact, asia has several groups of different stripes, like emeap, asean, asean + 3, asian development bank ( adb ), each with its own unique membership. such an " open - ended " modality for regional cooperation reflects asia's diversity in ethnic, historical, religious, and linguistic backgrounds. some say that asia's diversity could weaken its regional unity. there is some truth in this view, but diversity has its own advantages as well. it can create an environment in which people appreciate different values and ideas, develop a sense of tolerance to others, and become more innovative through such cross - cultural interaction. this is a unique advantage for asia to maximize, and i believe asian cooperation should move ahead in this direction. the first east asian summit meeting is slated for this december. the summit will be attended by the leaders of asean + 3 nations, india, australia, and new zealand and will be the first of its kind. this gathering of countries attests to the flexibility of asia's cooperation. given the prospect for energy development in east siberia or sakhalin, the attendees to the east asian summit may even include russia in the future. but this is anyone's guess, of course. iv. looming challenges despite the collective progress so far made, asian countries are facing new challenges. in my judgment, response to these problems will define the path of asian cooperation going forward. there is no doubt that high growth has enabled asia to savor better economic welfare. however, i see four challenges to further prosperity in asia ; • accelerate financial market integration • establish sound socioeconomic infrastructures like intellectual property right protection, transparent corporate governance, and impartial judiciary • tackle transnational problems like regional epidemics, natural calamities and environmental disruptions • formulate sustainable energy policy first, financial market integration. financial markets in asia are still ring - fenced by national borders. that makes it hard to link savings with investment opportunities within the region efficiently. as i said, the financial authorities in asia are working together to develop liquid bond markets, as they expect such markets to facilitate the marriage of savings and investment in the region. organic linkage of savings and investment would underpin sustainable growth in asia, thereby contributing eventually to the adjustment of global payment imbalances. second, socioeconomic

affect not only its economic activity and prices but also the global economy as well as global financial and capital markets. from this perspective, it is also necessary to closely monitor how the policies will affect japan's economic activity and prices. with regard to japan's economy, a key issue in the short run is how the annual spring labor - management wage negotiations will develop. regarding these negotiations, chairman tokura of keidanren noted at a recent press conference that strong momentum for wage hikes began in 2023, and this momentum accelerated significantly in 2024. he continued that, in 2025, he hopes to see this development take hold and achieve structural wage hikes. i fully share his aspiration. what is important is that wage hikes that are consistent with 2 percent inflation take hold in society as a matter of course. corporate profits have been at high levels, particularly for large firms. to sustain the virtuous cycle, it is essential that these profits be fairly distributed to small and medium - sized firms and eventually to households. the bank will examine how wage hikes by small and medium - sized firms will evolve, using the network of its head office and branches. while keeping an eye on these factors, the bank is currently updating the outlook for japan's economic activity and prices for 2025 onward by scrutinizing the latest data available and other information. this outlook will be presented in the outlook for economic activity and prices to be released in late january next year. i hope you will have a chance to read it. as i said at the outset, 2024 has been a year of steady progress toward achieving the price stability target in a sustainable and stable manner. i would like to close my speech today by expressing my strong hope that the virtuous cycle will continue in 2025, thereby leading to sustainable and stable achievement of the 2 percent target. thank you very much for your attention. achievement of the 2 percent price stability target and japan's economy speech at the meeting of councillors of keidanren ( japan business federation ) in tokyo december 25, 2024 ueda kazuo governor of the bank of japan introduction i. japan's economy and firms'behavior under deflation and low inflation ii. achievement of the 2 percent target and japan's economy iii. achievement of the 2 percent target and monetary policy chart 1 i. japan's economy and firms'behavior under deflation and low inflation firms'growth expectations expected growth rate output gap