. new issues stemming from financial innovation although there are many upsides of financial innovation, it also raises new issues and challenges for us. first and ironically, new information technologies have made sophisticated cyber - attacks possible. moreover, with the widespread use of the internet and smartphones for accessing financial services, financial networks are becoming increasingly " open. " accordingly, it is becoming much more important to take effective measures against cyber - attacks and maintain information security. second, financial authorities are extracting various information from the balance sheets of licensed financial institutions such as commercial banks. furthermore, the authorities use regulatory tools, such as capital requirements and liquidity standards, to impose constraints on these balance sheets in order to maintain financial stability. however, these measures may not be very effective for non - bank fintech firms, especially if they deal only with payment - related services, or if they match the supply and demand of funds without using their own balance sheet in their peer - to - peer, or p2p, lending. thus, financial authorities are facing new challenges in terms of obtaining information and maintaining financial stability. third, there are debates on whether and to what extent new types of transactions such as high - frequency trading and algorithm trading enabled by recent information technologies tend to increase market volatility. theoretically, if technological innovation makes transactions more efficient, it could also contribute to market efficiency by increasing liquidity, for example. nonetheless, in view of the recent developments in various countries, policymakers must develop a deeper understanding of the impact of these new transactions on financial markets. even though new technologies bring new challenges, it may not be wise to try to stop technological innovation. i believe that policymakers should try to maximize the benefits and minimize the negative sides of technological innovation. in some sense, technological innovation reflects the basic human nature of " intellectual adventure. " i believe that human beings are inherently curious and search for better ideas to resolve problems, and that they have a genuine desire to communicate and share such ideas with other people. thus, i do not think it is easy to suppress such human characteristics. i believe the reason why smartphones have instantly become popular worldwide is that they were originally designed to be " tools for communication, " thus satisfying a basic human desire. moreover, if new information technologies are truly advanced ones, we should be able to utilize them also for enhancing information security and maintaining people's trust in financial transactions. to ensure that people support financial innovation and fintech, it is also important to

increase moderately as shown by firms ’ business fixed investment plans in the june 2013 tankan ( short - term economic survey on enterprises in japan ). although there are disparities among demand components, they have shown some positive developments, and in this situation japan ’ s economy has become increasingly robust – albeit gradually. in these circumstances, the employment and income situation, which had lagged behind other demand components, is expected to improve gradually. b. outlook for and risks facing the global economy the prerequisite for japan ’ s economy to return to a self - sustained growth path is that overseas economies move out of the deceleration phase that has continued since 2012 and return to a moderate recovery path. on this point, the resilience in the u. s. economy even under the fiscal drag is a positive factor, but it is a matter of concern that the chinese and other emerging economies have not yet shown clear signs of acceleration in growth. the world economic outlook, updated in july by the international monetary fund ( imf ), shows that the growth rates of these economies will increase gradually from 2013 to 2014, but these economic projections were revised downward from the april update ( chart 19 ). however, the u. s. economy – which is increasing its robustness – is expected to firmly propel the global economy even in a situation where emerging economies are losing their role as the driving force in the global economy. therefore, on the whole, there is almost no considerable change in the outlook that the global economy will return to a moderate recovery path. the u. s. economy experienced a soft patch during the april - june quarter of 2013 due to the effects of fiscal austerity measures. from the july - september quarter, as the effects dissipate to some extent, the u. s. economy is likely to exhibit relatively high growth on the back of firm consumer sentiment and a pick - up in the housing market ( charts 20 and 21 ). the fact that the debt ceiling problem has been delayed until autumn 2013 at the earliest due to higher - than - expected federal government revenues is judged to be one of the factors reducing the immediate tail risk. the european economy still lags behind, but the situation does not call for a further downward revision to the economic outlook. this is because ( 1 ) european countries are shifting away from and softening fiscal austerity measures ; ( 2 ) exports from europe are improving to some extent ; and ( 3 ) business and household sentiment is