The administration of Shinzo Abe is investigating the formation of a Japan Investment Corporation that would manage a portion of Japan's nearly $1,000bn of foreign exchange reserves. In addition to increasing the income from this huge national asset, Japan can also alleviate yen appreciation pressure and promote the country as an inter-national financial centre.

Equity returns in developed countries clearly exceed fixed income returns over the long run and global diversification provides better rewards relative to risk. Indeed, from 1985, the World Ex-Japan MSCI index in yen terms has returned more than 570 per cent, while the Lehman US Treasuries index returned only 149 per cent.