. furthermore, while financial institutions have been spending more on compliance with various regulations following the global financial crisis, we are now seeing efforts to apply it technologies in this area, which are referred to as regtech, following fintech. the use of regtech is still in its infancy, but i must say that it was a groundbreaking endeavor by the iif to release a report on this issue as early as it did. 8 " personalization of services " could be regarded as a tailoring of services at a more granular level than previously possible. for example, in everyday application, monitoring of physical conditions through censor - based wearable devices, and in a more rarefied setting, gene therapy taking account of individuals'dna readings. examples of transaction banking are cash management, trade finance, and supply - chain finance. iif ( 2016 ), " regtech in financial services : technology solutions for compliance and reporting. " circumspection and innovation at financial institutions although there are opportunities, some leading thinkers argue that banks should distance themselves from innovation and return to a simpler business structure focusing on deposit taking and lending. such a view is one reflection of the situation that existed before the global financial crisis, at which time banks were jokingly described as " too complex to succeed. " in fact, in places like europe following the crisis, we can observe trends in banks'lending and funding, which might be described as back to retail. nevertheless, i cannot buy the idea that banks should be dull, boring, and far removed from innovation. such a view seems too extreme and ignores, among other things, the extensive information gathering ability of banks. if banks distance themselves from cutting - edge innovations, that could affect their business models. for example, if retail deposits begin to move around more frequently due to fintech, intermediary services performed by banks, for which funding is reliant on relatively sticky deposits, would be forced to change. in the united kingdom and the united states, debate is now underway on the appropriateness of granting banking licenses and central bank access to fintech enterprises, and this shows that a new horizon of cooperation and competition is being opened up between banks and fintech enterprises. once upon a time, the u. s. economist william j. baumol noted that the number of musicians needed to play a beethoven string quartet was four in the 19th century and remained so in the 20th century. that illustrated the baumol effect, which observed that it

bank of japan ’ s june review of monetary and economic trends in japan bank of japan, communication, 20 / 6 / 97. japan ’ s economy continues on a moderate recovery trend on the whole. while declines in demand have been widely observed in reaction to the stepped - up demand prior to the rise in the consumption tax rate, production and income have been firm. with respect to final demand, public - sector investment has been decreasing, and housing investment has been somewhat lackluster, mainly in reaction to stepped - up demand ahead of the consumption tax hike. however, net exports have continued to rise and business fixed investment is increasing steadily. although personal consumption has declined in reaction to stepped - up demand, the recovery trend of personal consumption does not seem to have been hindered, under the improvement in labor market conditions and income formation. in these circumstances, industrial production has been firm, partly supported by the rebuilding of inventories which had fallen below appropriate levels owing to the temporary surge in demand ahead of the consumption tax hike. meanwhile, prices have remained virtually unchanged, excluding the influence of the consumption tax hike. the growth of monetary aggregates has continued at around 3. 0 per cent year to year. with regard to personal consumption, outlays for travel have continued on a moderately increasing trend. with respect to goods, sales, particularly of expensive items, have been declining since april following increased demand prior to the consumption tax hike. passenger - car sales recorded buoyant double - digit growth year to year for six consecutive months from october 1996 to march 1997, but marked double - digit declines year to year in april and may. sales of electrical appliances, as well as sales at department stores and supermarkets, fell significantly below the previous year ’ s level in april. may figures available for department stores in tokyo also show negative growth year to year, although with a smaller decline compared to that in april. however, the recovery trend in personal consumption does not seem to have been hindered, as labor market conditions as well as income formation are improving steadily, albeit moderately. among leading indicators of business fixed investment, machinery orders have been on a steadily increasing trend, despite some large fluctuations particularly in the nonmanufacturing sector. construction floor area has also continued to recover moderately. with respect to housing investment, housing starts in terms of the seasonally - adjusted annual rate reached a significantly high level in the fourth quarter 1996, partly reflecting the stepped - up demand ahead of the rise in the consumption tax