and the ability of financial institutions to find and support promising firms will be improved. bis central bankers ’ speeches iv. revitalizing the japanese economy i will now take a look at the japanese economy from a longer - term perspective. although japan has undergone various phases of economic cycles since the bursting of the economic bubble in the early 1990s, growth on average has been poor. the past 20 years or so of weak growth and deflation have been dubbed the “ two lost decades. ” the devastating earthquake that hit japan on march 11 this year has further aggravated the situation. in order for the economy to emerge from the current slow growth and regain its strength, it is necessary to introduce drastic measures designed not only for the reconstruction of disasterstricken northeastern regions but also for revitalization of the japanese economy as a whole. a. causes of the low growth in the japanese economy before moving on to the topic of revitalizing the japanese economy, i will first touch upon the causes of the high growth experienced after world war ii and ensuing period of low growth. three factors combined to create a favorable environment for the postwar rapid growth. first, japan was in a position to take advantage of being a latecomer, learning from the growth process of advanced economies such as the united states and europe. second, the rise in the working - age population meant an increase in the population bonus, that is, the high share of the working - age population in the total population. and third, japanese manufactured goods enjoyed a superior competitive edge in the absence of rivals outside the united states and europe. during this period of soaring growth, japan ’ s economic model – based on government industrial policy, the main bank system, the seniority system, and lifetime employment – functioned successfully. by about 1970, however, japan had more or less caught up with the united states and europe. around this period, the population bonus started to fade. furthermore, the outbreak of the oil crisis and rapid appreciation of the yen put a brake on the high - speed economic growth. the continued upward trend in the working - age population and the absence of competitors in the production of manufactured goods enabled the japanese economy to grow steadily. however, downward pressure on the economy intensified as the increased presence of japan in international markets gave rise to heated trade friction while the plaza accord in 1985 led to an appreciating yen. in order to counter the downward pressure, measures were taken to expand domestic demand, which eventually led to the emergence of the economic

the uk ’ s political turmoil. as we know from international negotiation theory, a leader can use domestic dispute as a negotiation resource, arguing that she cannot move any further because she has no room for manoeuvre at home. that ’ s why it was necessary for eu leaders to call for the uk to deliver soon in order to move on to phase two in december. in sum, then, the state of negotiations has to be taken seriously – but there is no reason to panic. why not?, you may ask, as the outlook seems quite dramatic. there are two reasons. first, the process we are witnessing is not that unusual for complex political negotiations – they take time, and in the beginning both sides typically weigh up their options and their opponents first. thus, it is often the case in such negotiations that concrete results only become visible shortly before the deadline. that it takes time is also quite sensible, seeing as a lot is at stake. the decisions taken will influence uk - eu relations for decades ; moreover, they will have a lasting impact on global supply chains and geopolitical constellations. the second reason why we need to keep calm is that the uk government is apparently ready to compromise. while prime minister may ’ s speech in january was widely perceived as indicating a hard brexit – ( quote ) “ no deal is better than a bad deal ” ( unquote ) – her tone and stance have softened in the meantime. this was clearly signalled in her florence speech. we now know that the uk government aims to strike an ambitious free - trade deal and reach a customs agreement. in exchange, they are prepared to offer permanent residence for eu citizens and a clear budgetary commitment regarding their liabilities. overall, therefore, the chances of reaching a deal might be better than they appear at the moment. 4 hope for the best, but prepare for the worst given this calm assessment of mine, some may conclude that firms could simply sit back and wait. nothing could be farther from the truth. let me explain why, by focusing on the financial services sector. what will the impact of brexit be on financial institutions? financial institutions should prepare for the worst case – that is, a “ no deal ” scenario – with a disorderly exit of the uk in march 2019. as daunting as it seems, this “ no deal ” scenario is – if we take a positive view – luckily, quite clear ; there will be no surprises. wto rules