haruhiko kuroda : digitalization - financial services for society speech ( virtual ) by mr haruhiko kuroda, governor of the bank of japan, at the fin / sum 2022, tokyo, 29 march 2022. * * * introduction i am delighted to be given this opportunity to speak to you at the fin / sum 2022 through a video message. the main theme of this year ’ s fin / sum is “ aiming for two - way players in both business and society. ” climate change, pandemics, social inequality, and many other issues of today all have a great deal to do with our society, that is to say, our livelihoods. under these circumstances, financial services should constantly evolve to meet the diverse needs of people ’ s everyday life. if businesses are committed to meeting such needs, new businesses will be created one after another, becoming a source of growth. also, every economic activity should ultimately contribute to an improvement in people ’ s livelihoods. today, i would like to talk about the role that digitalization will play in enabling more people to receive financial services that fit their livelihoods. new combinations of consumers and businesses last year at this forum, i mentioned that schumpeter, who is considered to be the founder of innovation theory, introduced the concept of innovation with the term “ new combinations ” in his book the theory of economic development. according to schumpeter, innovation is not necessarily about invention but is more about creating new combinations. today, digitalization is creating new combinations in many fields. in the past, financial services for consumers were provided face - to - face in physical locations. now, with the widespread use of the internet and smartphones, it is not unusual to find digitalized financial services that require no face - to - face interaction, such as online banking and securities transactions as well as smartphone - based mobile payment services. the spread of covid - 19 has led to an increase in people ’ s demand for services through these digital channels regardless of age group. the digital world has no geographical limitations. these days, we often hear the term “ metaverse, ” coined by combining “ meta ” and “ universe. ” metaverse has its origin as the name of a fictitious virtual space service that appears in a novel snow crash, released by neal stephenson, a science fiction novelist, in 1992. today, this term is broadly used to refer to the wide - ranging activities of avatars that represent

a rapid recovery in economic activity and a substantial rise in housing prices, and australia, followed by norway, decided last month to raise the policy interest rate. there are several reasons for the economic recovery in the emerging economies. first, the underlying trend in domestic demand in the emerging economies is strong to start with, supported mainly by boosted consumption owing to an improvement in the standard of living as well as need to improve social infrastructure. those countries, typically china, are likely to potentially have strength to achieve high economic growth. second, the emerging countries themselves have also implemented aggressive stimulative measures in response to the current crisis. unlike the advanced countries, the emerging economies were not facing the problem of balance - sheet adjustment and potential demand was strong to start with, thus the multiplier effects of fiscal stimulus might have been significant. third, the effects of accommodative monetary policy in the advanced economies have spread to the emerging economies. market participants often use the term " dollar carry trade. " there was a period when " the yen carry trade " was talked about, and this time, as many advanced economies are adopting low interest rate policy, funds obtained in the most deep u. s. dollar - fund market are flowing into emerging economies again, and investors are starting to take risk. in addition, since many emerging economies are adopting a fixed foreign exchange policy pegging own currency to the u. s. dollar, that also seems to have brought about monetary easing effects. those developments have improved significantly the financial environment in the emerging economies mainly through an increase in credit provisioning and a rise in asset prices, thereby underpinning their economic recovery. as such, there are at present two groups of economies in the world, namely the advanced economies that are strongly affected by the balance - sheet adjustments, and the emerging and commodity - exporting economies that are not facing such a problem and are gradually becoming a growth engine for the global economy. as explained earlier, the difference in the pace of recovery between the two groups has enhanced the capital inflows from the advanced economies into the emerging economies, and those capital inflows are likely to contribute to boosting economic activity in the emerging economies for some time. however, if such a situation continues too long, it could lead to overheating of the economy or turmoil in the financial markets, which could lead to an ensuing economic downturn. that is not desirable for the advanced economies either. as economic globalization progresses and economies further strengthen their