Haruhiko Kuroda: The global economy and the global financial system - in an era of revival and metamorphosis

Speech by Mr Haruhiko Kuroda, Governor of the Bank of Japan, at the 2017 Institute of International Finance (IIF) Spring Membership Meeting, Tokyo, 9 May 2017.

Introduction: Ten years on from the Global Financial Crisis

Thank you very much for giving me the opportunity to address the Spring Membership Meeting of the Institute of International Finance (IIF).

This year, we will be entering the ninth year since Lehman Brothers collapsed. That event in September of 2008 was one of the most visible flashpoints of the Global Financial Crisis, but if we count from what should be seen as the foreshock - severe disruptions in the U.S. subprime mortgage market in 2007 - we are marking the tenth anniversary of the Crisis. We have indeed come a long way. Since the Crisis, the global community has put considerable efforts into rebuilding the financial system, and such efforts have contributed to greatly enhancing the stability and resilience of the international financial system, compared with what we had before the Crisis.

The list of achievements regarding the reform of the international financial system since the Crisis is quite long. Basel III was introduced. The over-the-counter (OTC) derivatives market was reformed. Risk management at central counterparties (CCPs) was strengthened. The process of resolving financial institutions was improved, and so on. Of these reforms, Basel III, which applies to internationally active banks, ushered in significant changes to the existing framework of banking regulation in terms of both capital and liquidity. After almost seven years of negotiations, we are now crossing the t's and dotting the i's. The fact that we have reached this stage for a very complex framework, which must accommodate conflicting national interests, proves that financial authorities and banks, which experienced perhaps the worst turbulence since the Great Depression of the 1930s, have worked together, sharing a firm commitment not to see a repeat of the Crisis. This is a notable achievement in the annals of international financial cooperation.