Bank of Japan

The Bank of Japan (日本銀行, Nippon Ginkō, BOJ, JASDAQ: 8301) is the central bank of Japan.^[1] The Bank is often called Nichigin (日銀) for short. It has its headquarters in Chūō, Tokyo.^[2]

History

Like most modern Japanese institutions, the Bank of Japan was founded after the Meiji Restoration. Prior to the Restoration, Japan's feudal fiefs all issued their own money, hansatsu, in an array of incompatible denominations, but the New Currency Act of Meiji 4 (1871) did away with these and established the yen as the new decimal currency, which had parity with the Mexican silver dollar.^[3] The former han (fiefs) became prefectures and their mints became private chartered banks which, however, initially retained the right to print money. For a time both the central government and these so-called "national" banks issued money. A period of unanticipated consequences was ended when the Bank of Japan was founded in Meiji 15 (October 10, 1882), under the Bank of Japan Act 1882 (June 27, 1882), after a Belgian model. It has since been partly privately owned (its stock is traded over the counter, hence the stock number).^[4] A number of modifications based on other national banks were encompassed within the regulations under which the bank was founded.^[5] The institution was given a monopoly on controlling the money supply in 1884, but it would be another 20 years before the previously issued notes were retired.^[6]

Following the passage of the Convertible Bank Note Regulations (May 1884), the Bank of Japan issued its first banknotes in 1885 (Meiji 18). Despite some small glitches—for example, it turned out that the konjac powder mixed in the paper to prevent counterfeiting made the bills a delicacy for rats—the run was largely successful. In 1897, Japan joined the gold standard,^[7] and in 1899 the former "national" banknotes were formally phased out.

The Osaka branch of the Bank of Japan is seen in the top right of this 1930 aerial photograph. The wide street in front of the bank is part of the Mido-Suji.

Since its Meiji era beginnings, the Bank of Japan has operated continuously from main offices in Tokyo and Osaka.

Reorganization

The Bank of Japan was reorganized in 1942^[1] (fully only after May 1, 1942), under the Bank of Japan Act of 1942 (日本銀行法昭和17年法律第67号), promulgated on February 24, 1942. There was a brief post-war period during the Occupation of Japan when the bank's functions were suspended, and military currency was issued. In 1949, the bank was again restructured.^[1]

In the 1970s, the Bank's operating environment evolved along with the transition from a fixed foreign currency exchange rate and a rather closed economy to a large open economy with a variable exchange rate.^[8]

During the entire post-war era, until at least 1991, the Bank of Japan's monetary policy has primarily been conducted via its 'window guidance' (窓口指導) credit controls (which are the model for the Chinese central bank's primary tool of monetary policy implementation), whereby the central bank would impose bank credit growth quotas on the commercial banks. The tool was instrumental in the creation of the 'bubble economy' of the 1980s. It was implemented by the Bank of Japan's then 'Business Department' (営業局), which was headed during the 'bubble years' from 1986 to 1989 by Toshihiko Fukui (who became deputy governor in the 1990s and governor in 2003).^[9]

A major 1997 revision of the Bank of Japan Act was designed to give it greater independence;^[10] however, the Bank of Japan has been criticized for already possessing excessive independence and lacking in accountability before this law was promulgated.^[11] A certain degree of dependence might be said to be enshrined in the new Law, article 4 of which states:

In recognition of the fact that currency and monetary control is a component of overall economic policy, the Bank of Japan shall always maintain close contact with the government and exchange views sufficiently, so that its currency and monetary control and the basic stance of the government's economic policy shall be mutually harmonious.

However, since the introduction of the new law, the Bank of Japan has rebuffed government requests to stimulate the economy.^[12]

Curbing deflation

Following the election of Prime Minister Shinzō Abe, the Bank of Japan has, with Abe's urging, taken proactive steps to curb deflation in Japan. On October 30, 2012, The Bank of Japan announced that it has undertaken further monetary-easing action for the second time in a month.^[13] Under the leadership of new Governor Haruhiko Kuroda, the Bank of Japan released a statement on April 5, 2013 announcing that it would be purchasing securities and bonds at a rate of 60-70 trillion yen a year in an attempt to double Japan's money base in two years.^[14] By 2016 it was apparent three years of monetary easing had had little effect on deflation, and the Bank of Japan instigated a review of its monetary stimulus program.^[15]

Mission

The place of the foundation of the Bank of Japan

According to its charter, the missions of the Bank of Japan are

Issuance and management of banknotes
Implementation of monetary policy
Providing settlement services and ensuring the stability of the financial system
Treasury and government securities-related operations
International activities
Compilation of data, economic analyses and research activities

Location

The Bank of Japan Osaka Branch

The Bank of Japan is headquartered in Nihonbashi, Chūō, Tokyo, on the site of a former gold mint (the Kinza) and, not coincidentally, near the famous Ginza district, whose name means "silver mint". The Neo-baroque Bank of Japan building in Tokyo was designed by Tatsuno Kingo in 1896.

The Osaka branch in Nakanoshima is sometimes considered as the structure which effectively symbolizes the bank as an institution.

Governors

Governor of the Bank of Japan
Incumbent Haruhiko Kuroda since March 20, 2013
Style	His Excellency
Appointer	Prime Minister
Term length	Five years
Inaugural holder	Yoshihara Shigetoshi
Formation	October 6, 1882

The Governor of the Bank of Japan (総裁, sōsai) has considerable influence on the economic policy of the Japanese government. Japanese lawmakers endorse the Bank of Japan Governor Haruhiko Kuroda. He is seen to adopt Reflation policy as part of Abenomics.^[16]

List of governors

#	Governor	Took Office	Left Office
1	Yoshihara Shigetoshi	October 6, 1882	December 19, 1887
2	Tomita Tetsunosuke	February 21, 1888	September 3, 1889
3	Kawada Koichiro	September 3, 1889	November 7, 1896
4	Iwasaki Yanosuke	November 11, 1896	October 20, 1898
5	Tatsuo Yamamoto	October 20, 1898	October 19, 1903
6	Shigeyoshi Matsuo	October 20, 1903	June 1, 1911
7	Korekiyo Takahashi	June 1, 1911	February 20, 1913
8	Yatarō Mishima	February 28, 1913	March 7, 1919^[17]
9	Junnosuke Inoue (First)	March 13, 1919	September 2, 1923
10	Otohiko Ichiki	September 5, 1923	May 10, 1927
11	Junnosuke Inoue (Second)	May 10, 1927	June 1, 1928
12	Hisaakira Hijikata	June 12, 1928	June 4, 1935
13	Eigo Fukai	June 4, 1935	February 9, 1937
14	Seihin Ikeda	February 9, 1937	July 27, 1937
15	Toyotaro Yuki	July 27, 1937	March 18, 1944
16	Keizo Shibusawa	March 18, 1944	October 9, 1945
17	Eikichi Araki (First)	October 9, 1945	June 1, 1946
18	Hisato Ichimada	June 1, 1946	December 10, 1954
19	Eikichi Araki (Second)	December 11, 1954	November 30, 1956
20	Masamichi Yamagiwa	November 30, 1956	December 17, 1964
21	Makoto Usami	December 17, 1964	December 16, 1969
22	Tadashi Sasaki	December 17, 1969	December 16, 1974
23	Teiichiro Morinaga	December 17, 1974	December 16, 1979
24	Haruo Maekawa	December 17, 1979	December 16, 1984
25	Satoshi Sumita	December 17, 1984	December 16, 1989
26	Yasushi Mieno	December 17, 1989	December 16, 1994
27	Yasuo Matsushita	December 17, 1994	March 20, 1998
28	Masaru Hayami	March 20, 1998	March 19, 2003
29	Toshihiko Fukui	March 20, 2003	March 19, 2008
30	Masaaki Shirakawa	April 9, 2008	March 19, 2013
31	Haruhiko Kuroda	March 20, 2013	Incumbent

Monetary Policy Board

As of October 2014, the board responsible for setting monetary policy consisted of the following 9 members:

Haruhiko Kuroda, Governor of the BOJ
Kikuo Iwata, Deputy Governor of the BOJ
Hiroshi Nakaso, Deputy Governor of the BOJ
Ryuzo Miyao
Yoshihisa Morimoto
Sayuri Shirai
Koji Ishida
Takehiro Sato
Takahide Kiuchi

^[18]

Notes

1 2 3 Nussbaum, Louis Frédéric. (2005). "Nihon Ginkō" in Japan encyclopedia, p. 708., p. 708, at Google Books
↑ "Guide Map to the Bank of Japan Tokyo Head Office." Bank of Japan. Retrieved on December 22, 2009.
↑ Nussbaum, "Banks" at p. 69., p. 69, at Google Books
↑ Vande Walle, Willy et al. "Institutions and ideologies: the modernization of monetary, legal and law enforcement 'regimes' in Japan in the early Meiji-period (1868-1889)" (abstract). FRIS/Katholieke Universiteit Leuven, 2007; retrieved 2012-10-17.
↑ Longford, Joseph Henry. (1912). Japan of the Japanese, p. 289.
↑ Cargill, Thomas et al. (1997). The political economy of Japanese monetary policy, p. 10.
↑ Nussbaum, "Banks" at p. 70., p. 70, at Google Books
↑ Cargill, p. 197.
↑ Werner, Richard (2002). ‘Monetary Policy Implementation in Japan: What They Say vs. What they Do’, Asian Economic Journal, vol. 16 no.2, Oxford: Blackwell, pp. 111-151; Werner, Richard (2001). Princes of the Yen, Armonk: M. E. Sharpe
↑ Cargill, p. 19.
↑ Horiuchi, Akiyoshi (1993), "Japan" in Chapter 3, "Monetary policies" in Haruhiro Fukui, Peter H. Merkl, Hubrtus Mueller-Groeling and Akio Watanabe (eds.), The Politics of Economic Change in Postwar Japan and WWest Germany, vol. 1, Macroeconomic Conditions and Policy Responses, London: Macmillan. Werner, Richard (2005), New Paradigm in Macroeconomics, London: Macmillan.
↑ See rebuffed requests by the government representatives at BOJ policy board meetings: e.g. or refusals to increase bond purchases: Bloomberg News
↑ "Bank of Japan Expands Asset-Purchase Program.". The Wall Street Journal.
↑ Riley, Charles (April 4, 2013). "Bank of Japan takes fight to deflation". CNN.
↑ Stanley White (31 July 2016). "'Helicopter monet' talk takes flight as Bank of Japan runs out of runway". The Japan Times. Reuters. Retrieved 1 August 2016.
↑ "Japan: The Great Reflation Play Of 2013". TheStreet.com. Retrieved 2013-03-21.
↑ Masaoka, Naoichi. (1914). Japan to America, p. 127.
↑ "Policy Board".

References

Cargill, Thomas F., Michael M. Hutchison and Takatoshi Itō. (1997). The political economy of Japanese monetary policy. Cambridge: MIT Press. ISBN 9780262032476; OCLC 502984085
Longford, Joseph Henry. (1912). Japan of the Japanese. New York: C. Scribner's sons. OCLC 2971290
Masaoka, Naoichi. (1914). Japan to America: A Symposium of Papers by Political Leaders and Representative Citizens of Japan on Conditions in Japan and on the Relations Between Japan and the United States. New York: G.P. Putnam's Sons (Japan Society). OCLC 256220
Nussbaum, Louis Frédéric and Käthe Roth. (2005). Japan Encyclopedia. Cambridge: Harvard University Press. ISBN 978-0-674-01753-5; OCLC 48943301
Vande Walle, Willy et al. "Institutions and ideologies: the modernization of monetary, legal and law enforcement 'regimes' in Japan in the early Meiji-period (1868-1889)" (abstract). FRIS/Katholieke Universiteit Leuven, 2007.
Werner, Richard A. (2005). New Paradigm in Macroeconomics: Solving the Riddle of Japanese Macroeconomic Performance. New York: Palgrave Macmillan. ISBN 9781403920737; ISBN 9781403920744; OCLC 56413058
_____________. (2003). Princes of the Yen: Japan's Central Bankers and the Transformation of the Economy. Armonk, New York: M.E. Sharpe. ISBN 978-0-7656-1048-5; OCLC 471605161

External links

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Bretton Woods system

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Names in italics indicate non-sovereign (dependent) territories, former countries, or states with limited recognition

Economy of Japan

History	Economic history of Japan Foreign commerce and shipping of Empire of Japan Agriculture in the Empire of Japan Japanese asset price bubble Japanese post-war economic miracle Lost Decade (Japan) Zaibatsu Nemawashi Simultaneous recruiting of new graduates Shūshin koyō Nenko System Salaryman Keiretsu Japanese management culture Standard of living in Japan Amakudari

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Other topics	Research and development in Japan Industrial policy of Japan Government-business relations in Japan Economic relations of Japan Exports National debt of Japan

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