If the institutional frameworks are not improved, even transactions between residents may shift to overseas markets due to the exercise of choice by market participants. This may be called “transactions flight” rather than “capital flight.” As the financial markets constitute the infrastructure supporting the economic activity of a country, hollowing out of the markets must be prevented. B.
The Basic Approach to Market Reform As I have explained, market reform should not be conducted as a mere deregulation process. Rather, it should be promoted from the viewpoint of creating an internationally competitive market and making the market attractive to domestic and overseas participants.