haruhiko kuroda : realizing the asian century speech by mr haruhiko kuroda, governor of the bank of japan, at the international conference on “ the future of asia ”, tokyo, 24 may 2013. * 1. * * introduction good morning. i am honored to be here today at the international conference on the future of asia. in the 45 years of my career, i have moved from the ministry of finance to hitotsubashi university, the asian development bank, and now to the bank of japan. but wherever i have worked, my focus has been on asia, and i have always cherished my ties with my asian colleagues. from this standpoint, i will first briefly touch upon economic developments in asia, then move to the thrust of my speech today, which is the challenges to realizing the asian century and how these may be addressed, and close with how japan can contribute to these efforts. 2. economic developments in asia : factors driving growth while developed economies have experienced prolonged economic downturns since the lehman shock and the ensuing global financial crisis, asia has maintained a higher growth rate than any other region in the world, albeit with some slowdown. in particular, the growth of asean economies has been outstanding, with a boost in economic growth in 2012. i would like to point out three structural changes supporting the strength of the asian economies. the first change is that the supply chain in asia has been enhanced. an intraregional supply chain network, covering not just finished goods but also other areas of the supply chain ladder such as raw materials and intermediate goods, has been established by the relocation of firms, thereby underpinning the global competitiveness of the region. this integrated supply chain network would not have been possible without the second change i wish to point out, that is, trade liberalization, with the increase in fta agreements between economies both inside and outside the region. this trade liberalization is most pronounced in the korean and asean economies. intra - regional and cross - regional trade in asean economies is growing much faster than the global average. the third change is closely linked to the other two changes : the autonomous expansion of domestic demand with the increase in income reflecting increased production activities in the region. the expansion of domestic demand can be seen as a result of the asian economies ’ rebalancing of their economic growth toward a more domestic - driven model from that based on foreign demand. in particular, the economic rebalancing in china to

the chiang mai initiative. if asia succeeds in strengthening its own financial system, it can play an even more important role globally in designing new international financial architecture and discussing governance systems. 5. conclusion : how can japan contribute? to conclude, i would like to address the question, what can japan do to contribute to the realization of the asian century? the answer to this question is not singular. as i mentioned earlier, japan can contribute through trade, investment, and financial cooperation. japan can also assert its identity as a member of the asian region, to participate in the stronger regional ties and cooperation, through which japan can achieve higher growth. this would be mutually beneficial for both japan and other asian economies. in its early - april monetary policy meeting, the bank of japan introduced a new policy framework, quantitative and qualitative easing ( qqe ), with the aim of achieving the price stability target of 2 percent in terms of the year - on - year rate of change in the consumer price index ( cpi ) at the earliest possible time, with a time horizon of about two years. the bank believes this will lead japan ’ s economy to overcome the deflation that has lasted for nearly 15 years, and reinvigorate the economy, adding substance to japan ’ s efforts to contribute to the realization of the asian century. bis central bankers ’ speeches