banking or non - banking sector, as well as the authorities, are facing this challenge and trying to address it. 4 fujiki et al. ( 2012 ) suggest that elderly households in japan tend to have more stocks than younger households mainly because elderly households have on average more financial assets, while the effects of age per se play a relatively minor role. fujiki, h., n. hirakata, and e. shioji " aging and household stockholdings : evidence from japanese household survey data, " imes discussion paper no. 2012 - e - 17, institute for monetary and economic studies, bank of japan, 2012. concluding remarks i have talked about the impact of a declining and aging population on the financial sector today. the wave of population aging is already sweeping through many advanced and some emerging market economies. even in other emerging and developing economies with an increasing young working - age population, they will likely be faced with the problem of aging in the future. it will be increasingly important for financial authorities and financial institutions in many countries to share their knowledge and cooperate in tackling these challenges. let's take an example of the search - for - yield behaviors mentioned earlier. in countries with low interest rates amid population aging, financial institutions increase loans to and securities investment in emerging economies that offer relatively higher yields. while these kinds of capital flows could mitigate the negative impact of population aging, they may carry new risks to global financial stability. to address these risks, stepping up dialogues among the financial authorities of the countries concerned will be of great benefit. concerning the financial sector, financial services and business models need to accommodate various changes, including declining and aging population. at the same time, subsequent changes in the risk profiles of financial institutions also need to be considered. the bank of japan, while keeping up with these changes, will contribute to ensuring the soundness of financial institutions so that better financial services are provided to firms and households in a stable manner, in cooperation with the various authorities and parties concerned making use of opportunities such as international meetings. thank you for your attention.

november 19, 2018 bank of japan demographic changes and challenges for financial sector remarks at the paris europlace financial forum in tokyo haruhiko kuroda governor of the bank of japan introduction it is a great honor for me to have the opportunity once again to give a speech at the paris europlace financial forum. among the many occasions i was invited to this forum in the past, i talked about financial innovation in the last two years. this year, i would like to talk about another long - term issue faced by many advanced economies ; namely, demographic changes. among advanced economies, france has led the way in tackling the issues brought about by declining population. the total fertility rate has been gradually increasing ; however, it continues to face the challenges of an aging population. meanwhile, japan faces the headwinds of both a declining and an aging population, with a total fertility rate far below two. 1 today, i would like to talk about how such demographic changes are affecting the financial sector. i. demographic changes, economic growth, and interest rates first, let us consider the impact of a declining and aging population on economic growth. if the population is declining and aging at the same time, the working - age population decreases. since a reduction in the working - age population means a decrease in labor input, this leads to a slowdown in economic growth. even when the total population is increasing, a decrease in the proportion of the working - age population will reduce the growth rate of gdp per capita. of course, it is possible to mitigate the headwinds of a declining and aging population by using machines as a substitute for human labor or by promoting innovation. in fact, recent labor shortages in japan have boosted investment, such as in the automation of production lines and streamlining of operations with the introduction of new information technology. next, let us consider the impact of a declining and aging population on interest rates. to do so, we need to examine the balance between savings and investment. a declining and aging population would have both positive and negative effects on savings. the negative effect on 1 japan's total fertility rate in 2016 was 1. 44, far below the equilibrium level of about 2. 1, under which the population neither increases nor decreases. meanwhile, france's total fertility rate in 2016 was 1. 9. savings is an increase in the number of elderly people. this is because many of them live on running down the assets they had accumulated before retirement, and therefore