Field Trip to the Tokyo Stock Exchange and Bank of Japan

By Chak Sopheap

Published on IUJ, available in both English and Japanese.

On March 5, 2010, IUJ, with support from the JDS Program, organized a field trip where about 20 students were able to inspect how both the Tokyo Stock Exchange and the Bank of Japan operate and contribute to financial stability and growth.

At the Tokyo Stock Exchange, the history of the stock market and its operation were introduced via a video clip. Through this briefing, we learned the fact that the first company to issue stocks and bonds was the Dutch East India Company in 1602 through the Amsterdam Stock Exchange. In addition, we came to understand the distinction between investment through holding stock and through bank savings. Through banks, we can earn interest that is low compared to stocks where we can earn dividends from the company whose stock we invested in via broker agents. However, the main difference is that it is risky to invest in stocks, as our dividends depend on the health of the company. We then were able to see the real platform of the stock exchange, which is often shown on TV, including the Stock Market Index which moves indicating world stock transactions, the chart showing different stock companies and their share prices which promptly fluctuated in only a second, and the Market Center where traditionally many brokers came to make their stock transactions. However, with modern technology, stock transactions have become better operated online without crowding in face to face.

Then we moved on to visit the Bank of Japan where the role of the central bank was addressed. We now better understand the key functions of the central bank in monetary policy and financial system stability. Economic transactions and social security can be difficult and risky without the facilitation of a central bank. It was also amazing to see how the Bank of Japan is well prepared for not only the financial system problems, but also for natural disasters such as earthquakes. The bank is physically designed to protect from earthquakes as well as being able to provide money management when crises occur.

In a nutshell, this field trip offered much practical knowledge to participants coming from different countries to see how key financial institutions are functioning. More importantly, for myself, being from Cambodia, where a stock exchange will be commenced soon, probably within the next year, the visit to the Tokyo Stock Exchange is worth sharing. My suggestion for next year?s field trip is to have a deeper understanding and discussion of the risk management systems of these institutions (for example the current financial crisis: the role of these institutions) where students can incorporate Japan?s experience in their home countries.