TOKYO (Reuters) – Japan needs to promote digitalisation as rising inflation and interest rates will increase demand for new financial services from households, a Bank of Japan executive said on Friday.
Financial assets of Japanese households amount to about 2,200 trillion yen ($14 trillion), of which more than half is held in cash and deposits.
“Along with rising inflation, interest rates are also rising moderately. This has increased demand for new financial services,” said BOJ Executive Director Hirohide Kouguchi.
“It is likely that there will be greater need for diversified investment of financial assets to hedge inflation risk,” he said in a speech at a workshop on financial technology.
Among companies, there has been an increase in demand for financial services that support business restructuring, mergers and acquisitions, Kouguchi said.
New technologies with advanced information processing capacity will help the financial industry meet such diversifying needs from households and firms, he added.
“Increasing labor productivity through the use of digital technologies” is also an urgent agenda for Japan as its population ages, Kouguchi said.
The BOJ exited a decade-long, radical stimulus programme last year and raised short-term interest rates to 0.5% last week on the view Japan is on the cusp of seeing inflation stably achieve its 2% inflation target.
Core inflation in Japan’s capital hit 2.5%, marking the fastest annual pace in nearly a year, data showed on Friday, easily exceeding the central bank’s 2% target and keeping alive market expectations for further interest rate hikes.
($1 = 154.2400 yen)
(Reporting by Leika Kihara; Editing by Shri Navaratnam)
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