the cost of building the physical infrastructure required for traditional banking. that said, it should be noted that these benefits come with new risks. for example, large - scale system problems and cyber - attacks can negatively affect corporate management and the daily lives of individuals. privacy protection is important, and we should be mindful that these new technologies might be used for money laundering and tax evasion. moreover, policy makers should consider carefully the possible impact of the broader use of digital technologies on financial stability and the effectiveness of monetary policy. authorities should endeavor to maximize the benefits of new technologies while appropriately addressing the accompanying risks, through close cooperation, both domestically and internationally. b. achieving sustainable growth the second topic is the achievement of sustainable growth. since the industrial revolution, the global economy has undergone remarkable development. at the same time, however, a number of issues have emerged that require international cooperation to solve, such as those related to poverty, inequality and the environment. in 2015, the united nations adopted the sustainable development goals ( sdgs ), a set of goals to be achieved by 2030 targeting poverty, the environment, and other issues. here, i would like to provide two observations on social and environmental issues in relation to achieving sustainable growth. first, the enormous effort and cost involved in dealing with social and environmental issues is justified by the expected returns. in other words, there is no trade - off between solving social and environmental issues and achieving economic growth. rather, they are complementary to each other. for example, significant progress has recently been made in reducing poverty. according to the world bank, in 1981, more than 40 percent of the world's population was living in extreme poverty, but the figure has fallen to around 10 percent in 2019. 3 while economic growth leads to a decline in the poverty rate, the reduction of poverty and the resulting inclusive growth will in turn enhance economic growth, leading to a further reduction in poverty. the relationship between economic development and poverty reduction can be regarded as mutually - reinforcing. consensus has not yet been reached on the causal relationship between income disparity and growth rate in economies with a low poverty rate, as much theoretical and empirical research shows differing results. 4 that said, i believe an increase in the number of people who are given the opportunity for higher education and to learn advanced skills would lead to an accumulation of human capital, positively affecting economic growth from the supply side. with the digitalization of the economy, human capital becomes more important as the industrial

aging of the population occurs over a shorter period and at a faster pace than you might expect. 8 the good news about demographic change is that we can forecast prospective changes well in advance and with a certain degree of accuracy. in addition, emerging countries can learn from the precedents set in those advanced countries that are already experiencing problems related to an aging population. it is not too early to start preparing for prospective aging. although population aging has a wide range of economic implications, i would like to focus today on one of the main issues associated with aging, the pension system, by reviewing national institute of population and social security research, " population projections for japan. " japan's experience. the pension system is at the core of the social security system. as the pension system has a significant impact on people's lives, careful and detailed consideration is necessary before implementing reforms. for over 20 years in japan, we have been discussing various issues, including how to secure the financial resources necessary to support the pension system, and have made steady progress with reforms. the japanese pension system is largely based on the so - called pay - as - you - go scheme, where benefits for the elderly are paid out of premiums collected from the contemporary working age population. therefore, the aging of the population demands a regular review of the balance between premiums, benefits and government subsidies. after long and intensive discussion, a number of reforms have been adopted, including a raise in the pension age and an increase in the subsidy from the government. a mechanism called the " macroeconomic slide " has also been introduced, which automatically adjusts the amount of pension benefit by taking into account changes in the number of people insured and average life expectancy. at least once every five years, the government must carry out a comprehensive review of the financial conditions of the pension system, including its long - term prospects. the aging of the population has huge implications not only for the pension system but also for public finances in general. expenditure on health and elderly care has increased significantly in japan. the proportion of social security expenses to total annual expenditure has soared from around 14 percent in 1970 to around 35 percent at present. maintaining the credibility of public finance by ensuring medium - to long - term fiscal sustainability is essential. to this end, planning and reviewing the social security and tax system so that they can adapt to demographic changes is critically important. maintaining economic vitality amid an aging and shrinking population is also a critical issue. from a macroeconomic perspective