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Changes in the international order and international cooperation - JICA President KITAOKA Shinichi talks with President WATANABE Hiroshi of the Institute for International Monetary Affairs -

September 9, 2020

On Sept. 9, JICA President KITAOKA Shinichi had a discussion with President WATANABE Hiroshi of the Institute for International Monetary Affairs. This dialogue was conducted as part of a research project entitled "International Cooperation in the Post-COVID-19 World" launched by JICA, designed to comprehensively examine the future of the world and international cooperation through a series of dialogues between President Kitaoka and intellectuals inside and outside Japan.

First, President Watanabe stated that the spread of the novel coronavirus infection would change the way people, money, information and goods move, leading to a reconsideration of the international division of labor system and work styles. Then he suggested that if the US-China conflict intensifies, the prestige of both the US and China could be reduced. He emphasized that Japan should continue to consider Europe as an important partner and cooperate with Germany and France to form a "medium-sized states' union," and that it is necessary to strengthen cooperation with maritime ASEAN countries in the Indo-Pacific region.

Second, President Watanabe indicated the reasons why the impact of the novel coronavirus infection on the financial and monetary sectors was limited. He said that (1) against the background of an abundant liquid supply of funds from the central banks, funds flowing into the stock market for the purpose of short-term investment continued, and that (2) interest rates remained low in both developed and developing countries. He also predicted that countries with little financial capacity would allow central banks to step into fiscal finance, and he argued that the expansion of government debt should be watched so as not to lead to widening domestic inequality. He also pointed out the need for broader discussions on how to provide long-term funding to emerging and developing countries and how to prioritize vaccine recipients.

Next, in the dialogue with President Kitaoka, they discussed the possibility of restructuring supply chains and developing a loose regional block. In that situation, they agreed that Japan should cooperate with ASEAN countries further closer with a vision to form a "Western Pacific Union," or a "Pacific Union" (West Pacific Union + New Zealand and Australia).

Finally, President Kitaoka, President Watanabe and the members of the study group exchanged opinions on the state of fiscal and monetary policy during the financial crisis, and the role of JICA in a situation where international organizations are at the mercy of political conflicts. The dialogue provided an opportunity to deepen consideration of the role of Japan in the future and the possibility of regional cooperation in the rapidly changing international situations.