The Japanese must abandon their innate conservatism and become a nation of financially literate, aggressive risk-takers if the economy is to stand any chance of future growth, their Government said yesterday.

Japan's Cabinet Office called on individuals, funds and corporations to become better “connoisseurs” of risk, a shift that, in theory, could unlock some of the 775 trillion yen (£3.6 trillion) of household assets sitting in bank deposit accounts.

“Japan's weak growth potential and companies' low profitability arises from a shortage of risk-taking in various forms,” a Cabinet Office report said. “It is necessary for corporate Japan and households to become active risk-takers.”

Nurturing a generation of more demanding and discerning individual investors might, the report said, enable Japan's stock market to improve its immunity to the sort of external shocks that have panicked foreign investors and destablised shares.

There is particular focus on the need for stability in Japanese shares. The state pension investment fund, which manages the world's largest pool of pension money, at Y115 trillion, has admitted making negative returns in the business year that ended in March.

Richard Jerram, chief economist for Macquarie, the bank, said that the Government was wrong to view Japanese people as particularly craven, given the incentives for them to be conservative.

“It was perfectly reasonable for individual Japanese to put their money in savings and make virtually nothing by way of returns because economic mismanagement by the Government meant that putting their money into other assets would have made them less than nothing,” he said.

The Government's report calls for Japan's pension funds to become better sentinels of corporate governance and shareholder focus. The vast investment monoliths should also develop a better eye for backing start-up ventures, it said.

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