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Bank of Japan
Macro-Prudential Policy From an Asian Perspective
~ Prepared for the ADBI-FSA Conference in Tokyo, September 30 ~
Kiyohiko G NishimuraKiyohiko G. NishimuraDeputy Governor of the Bank of Japan
(Figure 1) Population Change and Bubble: Japan and USPopulation Change and Bubble: Japan and US
Inverse Dependency Ratio: Ratio of Working-Age Population to the Rest
= H l f ki h t id f d d t ?
3
= How many people of working age have to provide for one dependent person?
Peak of Japanese Peak of US sub
2.5Japan
property bubbleca 1990
Peak of US sub-prime bubble
ca 2007+
2
p
US
ca 2007
1.5
US
1Source: United Nations World Population Prospects:
1950
1960
1970
1980
1990
2000
2010
2020
2030
2040
2050
Year2
World Population Prospects: The 2010 Revision Population Database
(Figure 2) Population Change and Bubble: Periphery Europe
Inverse Dependency Ratio: Ratio of Working-Age Population to the Rest
= How many people of working age have to provide for one dependent person?
3
Spain
G
Periphery Europe(Spain, Portugal, Greece, and Ireland)
2.5
Greece
Portugal
Ireland
Peak of Spanish property bubble
2
Ireland
1.5
Source: United Nations World Population Prospects:
The 2010 Revision
Peak of Irish property bubble
1
1950
1960
1970
1980
1990
2000
2010
2020
2030
2040
2050
Year 3
The 2010 Revision Population Database
(Figure 3) Ageing Population and Property Prices: Japan
Relative abundance of young i id d i h hi h i
Ageing Population and Property Prices: Japan
1002.5(Inverse Dependency Ratio) (Real Land Price, Peak<Mar.1991>=100)
coincided with higher property prices
75
Relative abundance of old leads to lower property prices
50
2.0
25
1.5Declining property prices
aggravated B/S adjustment
01.0
5 0 5 0 5 0 5 0 5 0 5 0 5 0 5 0
Inverse Dependency Ratio (Japan)Real Land Price (PEAK=100)
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
2020
2025
2030
Year 4
(Figure 4) Ageing Population and Property Prices: USAgeing Population and Property Prices: US
1002.5(Inverse Dependency Ratio) (Real Property Price, Peak<Dec.2005>=100)
In US also, increasing Inverse
75
2.0
Dependency Ratio coincided with the property bubble
50
25
1.5
Inverse Dependency Ratio (US)
Declining Inverse Dependency Ratio may also
coincide ith decline in
01.0
5 0 5 0 5 0 5 0 5 0 5 0 5 0 5 0
Real House Price (US 10 cities, Case-Shiller Composite)
coincide with decline in property prices
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
2020
2025
2030
Year 5
(Figure 5) Ageing Population and Property Prices: IrelandAgeing Population and Property Prices: Ireland
1002.5
(Inverse Dependency Ratio) (Real Property Price, Peak<Dec.2006>=100)
A Sharp Ascent and then Free Fall
75
2.0
Means Painful B/S Adjustment
50
25
1.5
Inverse Dependency Ratio (Ireland)
01.0
55 60 65 70 75 80 85 90 95 00 05 10 15 20 25 30
p y ( )
REAL PP (Ireland)
195
196
196
197
197
198
198
199
199
200
200
201
201
202
202
203
Year
(Figure 6) Ageing Population and Property Prices: SpainAgeing Population and Property Prices: Spain
1002.5
Inverse Dependency Ratio (Spain)
(Inverse Dependency Ratio) (Real Property Price, Peak<Sep.2007>=100)
752.0
Inverse Dependency Ratio (Spain)REAL PP (Spain)
50
2.0
251.5
Price decline has not halted yet,i l d B/S dj
01.0
955
960
965
970
975
980
985
990
995
000
005
010
015
020
025
030
suggesting prolonged B/S adjustmentfor households and SMEs ?
19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 20
Year
(Figure 7) China compared with Japan and US
Inverse Dependency Ratio: Ratio of Working-Age Population to the Rest
= How many people of working age have to provide for one dependent person?
China compared with Japan and US
3
J
Chinese peak?
How many people of working age have to provide for one dependent person?
2.5
Japan
US
2
US
China
1.5
China
1
0 0 0 0 0 0 0 0 0 0 0
Source: United Nations World Population Prospects:
The 2010 Revision
1950
1960
1970
1980
1990
2000
2010
2020
2030
2040
2050
Year
The 2010 Revision Population Database
8
(Figure 8) Asia: Some Will See a Sharper Turn
Inverse Dependency Ratio: Ratio of Working-Age Population to the Rest
Asia: Some Will See a Sharper Turn
3 2010-2015:Sh i i
= How many people of working age have to provide for one dependent person?
2.5
Sharp turning pointfor Korea, Hong Kong,
Singapore, Thailand
2China
1 5
Korea
Hong Kong
Singapore1.5 Singapore
Thailand
Indonesia
1
1950
1960
1970
1980
1990
2000
2010
2020
2030
2040
2050
Year
Malaysia
9
(Figure 9) Asset size of Sanyo Securities and Northern Rock
(1) Total assets before SanyoS iti ’ b k t
(2) Total assets beforeN th R k' b k t
Asset size of Sanyo Securities and Northern Rock
Securities’ bankruptcy（31 March 1997）
20
（tri. yen）
1 400（￡bn）
Northern Rock's bankruptcy（30 June 2007）
16
18
20
1,200
1,400
12
14
800
1,000
6
8
10
400
600
2
4
200
400
10
0
Nomura Holdings Daiwa Securities Group
Sanyo Securities
（Source：Bloomberg）
0
Barclays HSBC RBS Northernrock
（Source：Bloomberg）
(Figure 10) Financial Cycle Indexes for JapanFinancial Cycle Indexes for Japan
(Type D, Forecast Real-time Leading Index)
Index = 0 Turning Point
1
1.5
Lagged FCIXs point this as False Signal
Index 0 Turning Point
0.5
1
0
-0.5
Bursting the B bbl
Failure of US
1 5
-1Bubble Sanyo Securities
Subprime Problems
11
-1.51985 90 95 2000 05 10
Note: From left to right, the vertical lines indicate the bursting of the bubble, the failure of Sanyo Securities, and the surfacing of the U.S. subprime problem.
(Figure 11) World’s Deepest Tsunami Breakwater at Kamaishi PortWorld s Deepest Tsunami Breakwater at Kamaishi Port
12
(Figure 11-continued) World’s Deepest Tsunami Breakwater at Kamaishi Port
1 960 (6 430 ft 5 i ) l
World s Deepest Tsunami Breakwater at Kamaishi Port
• 1,960 m (6,430 ft 5 in) long,
• 63 m (206 ft 8 in) deep,
• World’s deepest breakwater (Guinness World Records)
• Completed in March 2009
• Two years later, shattered by the force of a tsunamithe force of a tsunami equivalent to 250 Jumbo jets i ti t 1 000k /h
13
impacting at 1,000km/h
(Figure 12)False Sense of Security; Antique TsunamiFalse Sense of Security; Antique Tsunami Warning Inscriptions Ignored
Left: A stone tablet in Aneyoshi, Japan, warns residents not to build homes below this level.
• Hundreds of these so-called tsunami stones, some more than six centuries old, dot the coast of Japan.
14
Dusk at the BOJ Courtyard
15