The financial markets constitute the infrastructure supporting a nation’s economy, and thus their efficient and stable functioning is essential to the promotion of unhindered economic growth in the long term. Accordingly, market reform has become an urgent issue in Japan, as the financial markets seem to be losing international competitiveness.
However, various arguments are being heard on the pace and the potential side effects of the reform. Bearing these arguments in mind, I wish to return to the basics of market reform and discuss why a reform is currently needed in Japan and the approach to be taken in promoting the reform. II. Recent Monetary and Economic Conditions in Japan A.