Top > Economic Affairs > Study Group on International Economic and Financial Systems > MINISTER FOR FOREIGN AFFAIRS YOHEI KONO

(provisional translation)

STUDY GROUP ON INTERNATIONAL ECONOMIC AND FINANCIAL SYSTEMS

MINISTER FOR FOREIGN AFFAIRS YOHEI KONO

1. Issues in the International Community

The cross-border movement of goods, money, labor force and other elements for production is by no means a new phenomenon. However, the international community is faced both with globalisation and revolutionary progress in information and telecommunications technologies-the pace and scale of which have become greater than ever. The coverage of the market economy, which encompassed 100 million people (the population of OECD countries) during the Cold War period, has leaped beyond 400 million following the end of the Cold War. While on the one hand we are witnessing the dramatic expansion and intensification of networks in financial and information fields as a result of progress in information and telecommunications technologies, as well as further invigoration of economies, at the same time, however, we have also reached the point where, if a problem occurs in part of a network, it will permeate through to the system as a whole. In this way, the Asian currency and economic crises which began in the summer of 1997 had repercussions in other emerging economies, including the Russian Federation and Brazil since the summer of 1998, and escalated into shaking the entire global economy to its very foundations.

2. Inauguration of the Study Group

These circumstances have given rise to a heightening of debate internationally over the reform of economic and financial systems. Bearing in mind that the 2000 G8 Summit is to be held in Japan, this Study Group was inaugurated by former Minister for Foreign Affairs Masahiko Koumura in the form of private study meetings for the Foreign Minister. During the following period between February and December 1999, while the Study Group was being convened, the global economic crisis gradually calmed down and the world economy started to recover. While I succeeded this Study Group when I assumed my responsibilities as Foreign Minister, the Group itself, which comprises a number of distinguished individuals from various backgrounds under the excellent leadership of the Chair Mr. Toyoo Gyohten, has undertaken comprehensive deliberations on the various areas that form the backbone of the international economy-namely finance, trade, investment and development. In the process, the Group has discussed what efforts Japan should make to build international economic systems, what sorts of measures are required in the Asia-Pacific region, and what contribution Japan itself can make in this context. The reports of each Group member, created on the basis of the results of deliberations, contain a wealth of ideas and suggestions. The Chair's constructive report concisely summarises the main points of discussion. I have it read it with keen interest.

3. Future issues

The background to the outbreak of the Asian currency and economic crises is summarised in the Chair's report. Amidst rapid advances in the information technology (IT) revolution, globalisation exposed corporate management and the national management of economies to international competition, but governments and corporations of East Asia did not respond adequately to the demand from the market for transparent and accountable governance. As a result there arose unease and distrust of markets, which eventually contributed to the Asian economic crisis. It is therefore of vital importance that the countries afflicted by the economic crisis continue their efforts toward ensuring transparency and accountability to improve governance-even after effecting the sort of economic recovery which some people have described as a V-shaped upturn. I need hardly point out that such efforts are indispensable for all participants in the international economic and financial systems.

Recognising the difficulties of the Asian countries embroiled in the economic crisis, Japan advanced co-operation through the New Miyazawa Initiative and other measures. Efforts have also been made in the wake of the crisis, including the dispatch of the Okuda mission for the purpose of exploring the challenges faced by Asian countries and the future role for Japan in preventing a reoccurrence of a crisis and enhancing capacities to withstand crises. Japan is keenly aware of the importance of reform efforts to improve governance, and has indeed been actively engaged in dynamic reforms of its own. Sharing this awareness with Asian partners, Japan is determined to exert efforts to achieve prosperity in Asia, so that this prosperity can serve as an important pillar of the global economy in the 21st century.

The Study Group also collectively recognised the need to strengthen regional co-operation in order to prevent and address crises, drawing upon the experiences learned from the Asian economic crisis. In particular, the Group agreed upon the importance of enhancing mutual monitoring systems, and that Japan was required to exert proactive leadership in regard to this specific issue. With these points at the forefront of our minds, the Ministry of Foreign Affairs will continue to conduct studies with the relevant parties on how to strengthen regional co-operation from the economic angle, based on the deliberations of the Group.

4. Conclusion

The progress of globalisation and information and telecommunications technologies continues to accelerate, leading to significant changes in the international environment. Against this backdrop, Japan has assumed the G8 Presidency and this year will host the Kyushu-Okinawa Summit. Given that this year's Summit is the first to be held in Asia for seven years, Japan is intent on advancing discussions among the G8 from both a global perspective and with due respect to the interests and concerns of Asia. Recognising that the lessons learned from the Asian crisis, which occurred amidst the rapid progress in globalisation and information and telecommunications technologies, must also be shared among the G8, I firmly believe that the deliberations in this Study Group will serve as a useful reference for the discussions among the G8 countries.

Naturally, Japan must not merely confine its efforts relating to international economic and financial systems to the G8 Summit. It is for this reason that we will most certainly refer to the wealth of opinions and ideas contained in these reports in various contexts.

I would like to close by extending my heartfelt appreciation to Mr. Toyoo Gyohten, President of the International Institute for Monetary Affairs, for his sterling work as Chair of the Study Group, to all the members of the Study Group for taking time out of their busy schedules to assemble here, and to the staff of the International Institute for Monetary Affairs for organising the Secretariat for the Study Group.

Back to Index