As a keynote speaker, Mr. Mutoh gave his presentation on the topic: Japan’s Direction in Global Economy.
He believes it would be difficult for the CPI to reach 1% in 2014 or even 2015 mainly due to the low external demand, which means the Bank of Japan would be highly likely to keep monetary easing for the time being.
Meanwhile, Mr. Mutoh presented his viewpoint on the needs for Japan to establish its social security system suitable for a hyper-aged society. He noted that Japan currently has a very low rate of tax and social security burden despite the high elderly population ratio comparing to other developed nations.
His session also aroused interest from the audience, not least because the general election in Japan was only about one week away. Several questions on the foreign exchange policy and monetary policy were raised by the audience. Mr. Mutoh acknowledged the importance of financial policy, but also believed more comprehensive, structural, measures were essential to the future of Japan.

Summary: Mr. Shibata’s Presentation
The session opened with Mr. Shibata’s presentation on “Stability in the JGB Market - Japanese Debt Management Policy.”
Mr. Shibata introduced Japanese debt management policy from several angles. He analyzed the position of JGB market in the global bond market and the breakdown of JGB holders, stressing the characteristics of JGB foreign investors.
Mr. Shibata then spoke about fiscal consolidation in the context of the comprehensive reform of social security and tax in Japan. After a brief deliberation on the fiscal management strategy and the policy adjustment of Ministry of Finance Japan, the speech then shifted towards the general outlook on Japanese economy, GDP growth, and deflation.
He also mentioned the shared recognition between the BOJ and the Government stating “The Government and the Bank of Japan share the recognition that the critical challenge for Japan’s economy is to overcome deflation as early as possible and to return to a sustainable growth path with price stability.” and “The Government and the Bank will work together and make their utmost efforts to address this challenge.”

Panel Discussion
Mr. Shibata’s presentation was followed by a panel discussion chaired by Chris Scicluna, Head of Economic Research at Daiwa Europe, and including Keiko Onogi, Senior JGB Strategist, Daiwa Securities, Julian Suresh Sundaram, Director Fixed Income Sales, Daiwa Singapore, and Neil Davis, Executive Director of Bond Sales, Daiwa Europe. During the discussion, several topics were raised by the chairman.

The first topic concentrated on the key driving forces of the behavior of domestic investors in the JGB market. Since the upcoming Japanese general election was to be held on 16th Dec, which was only 10 days after the conference, the second topic focused on the likely impact on the JGB market of the next government’s likely policy initiatives, not least the expected new leader’s intentions with respect to monetary policy. Meanwhile, the possibility of new fiscal stimulus initiatives in the coming year and the ability of the market to absorb smoothly the additional extra JGB issuance was also considered by the panel The third main topic of discussion focused on the motivations of foreign investors participating in the JGB market, which included global factors (such as developments in other major government bond markets), developments with respect to the yen exchange rate and other specific issues such as those elated to foreign exchange reserve management. Finally, the panel discussed their expectations for JGB yields in coming months.

Mr. Ohashi gave his speech on the topic: Overview of Japanese Credit Market - Background of Aversion to Credit Risk.
In the speech, Mr. Ohashi presented his perspectives on why oversensitivity to credit risk is rife in the Japanese credit market thanks to the following reasons;
First, the recovery rate of Japanese domestic credit in default cases is very low, only around 10% compared to the worldwide average of almost 40%.
Second, downgrades in the Japanese credit market tend to be faster and bigger.
Finally, the CDS spread remains greater than the cash bond spread in Japan. Moreover, the CDS spread widens much more than the cash bond spread during credit events.
Mr. Ohashi used two industry sectors as examples to highlight his points:
1. The electric utility sector in the wake of the nuclear accident in Fukushima; and,
2. The impact from Sharp’s troubles on the consumer electronics sector:

Mr. Yamamoto’s session on the outlook for Japanese bond market was divided into two parts: global economic conditions and global money flow. In the first half, Mr. Yamamoto talked about the global shift from risk-on to risk-off mode and what he felt were the fading policy effects of the FOMC, ECB and BOJ. The concerns about the fiscal cliff in the US, the recession fear in Japan, and the medium to long term growth concerns in China were also highlighted. In the second half, Mr. Yamamoto talked about the further expansion in central bank balance sheets and the widening deposit-loan gap in Japan and in the US. Low & stable interest rates coupled with low volatility in both stock and bond markets caused the change in money flow . Mr. Yamamoto also gave his perspective on the US stock market and Japanese bond market.

In the rapidly changing world, foreseeing the futures is more difficult than ever. Making prompt and adequate decision is inevitable when Black Swan suddenly appears out of thin air, but the "Unknowns", despite the deliberate preparations, still takes the world by surprise and challenges its ability to correspond to the unprecedented situation.
Ideally, for the sake of adequate decision, an organization should not be afraid to change itself flexibly as the world evolves itself. But in reality, organization is typically not able to do so. Due to decision makers who rigidly holds onto its old consents and refuses to make new and drastic decisions, the situation typically ends up becoming aggravated. Here lies the reason why the Fukushima disaster is called "manmade" catastrophe by The National Diet of Japan Fukushima Nuclear Accident Independent Investigation Commission. From here on, I would like to retrace the world's past evolutions while arguing the necessary reform in our mindset in order to fight unprecedented problem.

The world has dramatically changed since the early '90s. 1991 is a revolutionary year where the Soviet Union collapsed and the World Wide Web site was publicly introduced. It is the year that the door opened to the globalization after the long Cold War has finally come to its end. In the late '90s, two graduate students at Stanford University founded Google, whose services have changed our everyday life. It goes without saying that Steve Jobs, who made his famous speech at the very University a few years later, left his mark on people's lifestyles all over the world. Those "crazy" ones, who are enthusiastic and always think outside the box, have called for the common sense revolution and unveiled a new chapter of human history.

We have seen far more changes for past two decades. Kyoto Protocol was adopted in 1997, for instance, but it seems to have failed to mitigate environmental problems. The September 11 terrorism utterly reversed our view over national security. In 2008, Barack Obama, backed by people’s enthusiasm for "change", was elected as first African-American president. It is a well-known story that his beloved Blackberry helped him raise a huge amount of money on grass-roots basis. Unfortunately, it seems as though the gadget failed to adjust itself to the rapidly changing circumstances, and is now almost swiped out from the market by iPhone, an even more innovative device that is replacing Blackberry. Smartphone has made it easier for people to connect with each other over the web platform called SNS which is what has made the Arab Spring possible. People in Africa and India can now transfer their money between banks using smartphones, instead of walking to the banks tens of miles away. No one could have foreseen all of these changes even years ago.

It is time to change our way of thinking because preconditions surrounding us have entirely changed. One of the factors behind the change is the population explosion. Thanks to the development of science technology, our quality of public health, nutrition and medicine have been enhanced, people can now live much longer than before. Our society is not designed under presumption that people would live as long as they do now, and it failed to catch up with the speed of population development. We believe that the deformation created by this is what has elicited today’s problems, such as European debt crisis and the Lost Decades in Japan.

The 9.0 magnitude earthquake and devastating tsunami hit Tohoku region on March 11th 2011. Since then, many people have been wondering why the catastrophic nuclear disaster happened in Japan, a country known to be the third biggest in world economy and where science and technology flourished. They have wondered how the nation’s leaders have handled the situation. In order to determine causes and results of the accidents and to propose measures to prevent nuclear accidents from happening in the future, the Secretariat of the National Diet of Japan Fukushima Nuclear Accident Independent Investigation Commission was found in December 8th 2011 and I was named the chairman of the commission.

Surprisingly, it is the first independent commission chartered by the Diet in the history of Japan’s constitutional government. Under the fundamental principle that the commission is "of the people, by the people, for the people", the 10 commissioners and I held 19 committee meetings open to public observation and broadcast on the internet (except for the first one) to a total of 800,000 viewers. In addition, we made more than 900 hours of interviews with 1,167 people, nine nuclear plant site visits and three town hall meetings. We disclosed our report and data in Japanese and English so that we could share our lessons learnt in order to operate nuclear plants safely.
After the elaborate investigation, the committee concluded that the accident was clearly a manmade disaster - that could and should have been foreseen and prevented. It was the result of collusion between the government, the regulators and TEPCO, and the lack of governance by said parties. The Commission believes the root causes of this accident cannot be resolved and that the people’s confidence cannot be recovered as long as this "manmade disaster" is seen as the result of error by a specific individual. The underlying issue is the social structure that results in "regulatory capture," and the organizational, institutional, and legal framework that allows individuals to justify their own actions, hide them when inconvenient, and leave no records in order to avoid responsibility. In sum, nobody could make an appropriate decision when the Black Swan was suddenly in sight.

Why not change our mindset - the mental attitude based on knowledge gained from past experiences? How can learn new things and become wiser? If we rely only on past experiences, we are going to be left behind the development of the world. We, especially young persons, need our own compass which navigates our future direction.
In the business world, it is said that the "push" model, under which supply-side tries to market products/services based on its own assumption, cannot survive anymore. Rather, demand-side driven approach is effective to capture the rapidly changing customer needs. The "pull" model places more value on practice than on theory as it is critical to know what end users really want. Entrepreneurs called lean-startups regularly post questions and get feedback on real world. While risks are relatively small, they should attempt to define customer needs through the trial and error process.
It is immensely essential to try to absorb different points of view from diverse people. I would like to emphasize the importance of women’s perspective, opinion and value because I believe they help organization in its decision making process. It is useful to know how they differ from men in vision and judgment.

No one can accurately predict the future or take responsibility for it. In order to make appropriate decisions under uncertain circumstances, we need to flexibly change our way of thinking and correspond to the changes that surrounds us.