earnings has continued to show high growth, due to a reflection of the results of the annual spring labor - management wage negotiations - - in which the rate of increase in base pay significantly exceeded last year's high rate - - and also due to last year's increase in the minimum wage. meanwhile, potential additional labor supply - - i. e., the difference between the workingage population and the number of employed persons - - is likely to shrink ( chart 8 ). this is because of demographic changes and because labor force participation of women and seniors has already advanced to a high degree. therefore, with labor market conditions becoming increasingly tight, wages will likely become more susceptible to upward pressure. to understand how much capacity firms have for raising wages, i would like to point to labor share, which shows the ratio of labor costs to value - added. labor share is higher at small and medium - sized firms than at large firms, suggesting that their capacity for raising wages is limited. however, looking at wage growth at firms with a high labor share, even small and medium - sized firms tend to have a positive stance toward raising wages if they expect to raise selling prices. with a view to realizing a virtuous cycle between income and spending, i believe it is important to continue to pay careful attention as to whether improving profits, resulting from the passthrough of cost increases to prices, and sustained increases in wages, will spread to micro, small, and medium - sized firms. c. current price developments in japan next, i would like to talk about prices in japan ( chart 9 ). the year - on - year rate of increase in the consumer price index ( cpi ) for all items excluding fresh food is above 2. 5 percent. the year - on - year rate of change in the producer price index ( ppi ), adjusted for the effects of seasonal changes in electricity rates, has risen. this reflects firms'moves to pass on increases in raw material costs, personnel expenses, and other costs to prices, as well as a scaling back of the government's measures to reduce the household burden of higher electricity and gas charges. the year - on - year rate of increase in the services producer price index ( sppi ) has remained relatively high recently at around 2. 5 - 3. 0 percent, mainly on the back of the rise in personnel expenses. the rate of increase in the cpi ( all items less fresh food and energy, 3 / 7 bis - central

haruhiko kuroda : our future in the digital age closing remarks by mr haruhiko kuroda, governor of the bank of japan, at the g20 high - level seminar on financial innovation, fukuoka, 8 june 2019. * * * i am delighted to be given this opportunity to speak to you at the end of this important seminar. today, we discussed two topics on the theme of “ our future in the digital age. ” the first session explored potential benefits and risks arising from financial and technological innovation. as a key to achieving a better society, speakers highlighted the importance of leveraging emerging digital technology in financial services. at the same time, they also pointed out the build - up of risks in the financial and economic system. the second session examined blockchain technology. the panel laid out key factors to facilitate a sound expansion of decentralized financial ecosystems. ongoing financial innovation is anticipated to further impact the financial and economic system. although it is difficult to predict the outcomes, we can learn from the progress and issues arising from financial innovation in the past decades. for example, credit and market risk management tools along with risk transfer technology enhanced financial intermediation. on the other hand, however, the global financial crisis was partly attributable to such progress in technology, which is still fresh in our minds. how then can we mitigate risks while benefiting from innovative technology? a good clue to that would be to interpret financial and economic activities as interactions within a system as well as among multiple systems. examples include portfolio insurance strategies on black monday, which led to an unexpectedly sharp drop in equity prices through interactions among market participants. the recent financial crisis displayed a feedback loop between deteriorated liquidity in securitization markets and severe funding conditions in the banking sector. historically, the financial system has carried risk - amplifying mechanisms in an insidious manner that would pose serious threats to the system as a whole. people realized their mistakes only after unexpected disasters took place. the modern financial system has repeated such experiences. innovative financial services and new entrants have begun to transform the structure of the financial system. we should reap the benefits of innovation while carefully assessing risks that build up unintentionally. recent innovation also provides us with policy tools to address these issues. incorporating big data into analytics reveals how individual market transactions and payment flows make up the entire financial network. evolution in computing capacity and computational technology has brought changes to existing analytical approaches, which