Bank of Japan
The Bank of Japan is the central bank of Japan, responsible for issuing and controlling the country's currency, implementing monetary policy, and ensuring the stability of the financial system. It plays a crucial role in regulating the Japanese economy, managing inflation, and fostering economic growth through its monetary policy decisions and interventions in the financial markets.
6 Key excerpts on "Bank of Japan"
eBook - ePub- Sandra Buckley(Author)
- 2006(Publication Date)
- Routledge(Publisher)
...Bank of Japan DOI: 10.4324/9780203996348-53 Directed by the Ministry of Finance, the Bank of Japan (Nippon Ginko or Nihon Ginko) was established in 1882 to stabilise the yen, avoid inflation in the early years of the Meiji Period (1868–1912) and to provide funds for the growth of business and industry. As with any other central bank, it is responsible for issuing banknotes and carrying out currency and monetary controls. It also manages inflation and maintains the value of the yen (fulfilling its role as the ‘guardian of the currency') by influencing financial-market operations through setting official bank interest rates, and buying or selling government bills and bonds. In addition, the Bank of Japan acts as the ‘banks' bank' by offering accounts to other financial institutions. These then settle transactions between themselves by transferring funds across the accounts held by each institution at the Bank of Japan. A further role is as the ‘government's bank'. Here, the Bank of Japan handles receipts and disbursements of national treasury funds, including acceptance of tax monies and payment of public works expenditures and public pensions. It also conducts accounting and bookkeeping for government agencies. Historically, the Bank conducted monetary policy with pressure exerted by the Ministry of Finance. However, a new Bank of Japan Law in 1998 requires more open disclosures through bi-annual reports of policies directly to the Diet (parliament). David Edgington...
eBook - ePubBusiness In Japan
a Guide To Japanese Business Practice And Procedure-- Fully Revised Edition
- Paul Norbury, Paul Norbury(Authors)
- 2019(Publication Date)
- Routledge(Publisher)
...Whereas, looking at the broad spectrum, over most of the post-war period, a major concern of monetary management has been to strike a balance between the needs of manufacturing industry and the private sector, with the government’s demands fairly modest, in the future the balance will have to be struck in rather different proportions with the government playing a much greater part. One could say that Japan’s industry has developed and modernised at a more rapid rate than the financial system which has fed it. The financial system which in the early post-war years was designed to foster and protect the growth of a still immature and vulnerable economy is now, itself, developing into a form which is more suited to the characteristics of today’s fully mature Japanese economy and the major role it has to play in the international system. Note * This chapter is based on a paper given to the British Association of Japanese Studies in April 1979. 14 Foreign Banks In Japan JOHN W. ROBINSON The business of the foreign bank in Japan is wholesale-oriented and is controlled by the following regulatory constraints. Foreign banks are not licensed to operate as savings banks or trust banks and cannot therefore undertake such business. With respect to foreign currency loans, (Impact Loans), facilities for less than one year are not permitted. With respect to conversion of foreign currencies into yen and accepting convertible free-yen deposits from their branches, foreign banks’ operations are restricted within certain limits by means of a Swap Quota which is allocated to each foreign bank by the Japanese monetary authorities. The quotas differ from bank to bank and whilst the individual allocations are not published, factors which presumably influence the size of the individual bank’s quota include (i) length of operation (i.e. how long the particular foreign bank branch has been established in Japan), (ii) significance in the market (i.e...
eBook - ePubFinancial Stability and Prudential Regulation
A Comparative Approach to the UK, US, Canada, Australia and Germany
- Alison Lui(Author)
- 2016(Publication Date)
- Routledge(Publisher)
...Modern central banks are primarily occupied with monetary-policy matters (Bank for International Settlements 2009) since confidence in price stability and the currency is crucial for a healthy economy. With time, the combination of economic crises, wars and the breakdown of the gold standard transformed central banks from government banks into public agencies. This shift to a public-policy dimension meant that central banks are now working towards the interests of the financial system as a whole, rather than for commercial objectives. Like most concepts in finance, financial stability is not absolute and it changes with time. It has many facets, embracing rule-making, policy development and supervision. The lender-of-last-resort role is a way for central banks to sustain financial stability by assisting individual banks rather than monitoring liquidity for the general financial system. In exceptional circumstances such as the global financial crisis, the general liquidity and specific liquidity lending under the lender-of-last-resort principle merge. It is interesting to note that only 20 per cent of the 146 central banks have express objectives for financial stability and that around 50 per cent of the world’s central banks have more generic objectives regarding financial stability. Since the global financial crisis, the Reserve Bank of Australia, Federal Reserve, Bank of Canada, Bank of England and ECB have all had the wide objective of promoting, enhancing and contributing to financial stability. Macro-prudential regulation and supervision contribute to financial stability by involving the relevant regulatory authority in monitoring systemic risks holistically. Effective central-bank regulation is of practical importance because it can affect the quality of bank regulation and supervision (Koetter et al. 2014). The ultimate aim of macro-prudential regulation is to avoid macro-economic costs linked to financial stability (Galati and Moessner 2010)...
eBook - ePubThe Great Inflation
The Rebirth of Modern Central Banking
- Michael D. Bordo, Athanasios Orphanides(Authors)
- 2013(Publication Date)
- University of Chicago Press(Publisher)
...The government has the power to replace Policy Board members as well as the governor. In reality, the bank senior executives sought after a tacit prior approval from the government over interest rate decisions, and the Policy Board had become just an automatic approving body of the bank executives. Getting approval of the interest rate changes was tricky. It often depended on the relationship between the governor and the minister of finance, or between the governor and the prime minister. Later in 1998, the Bank of Japan Law was revised. Cargill, Hutchison, and Ito (1997, 2001) describes the history and legal details of the Bank of Japan laws, with a comparison of scores of legal independence between the old and new laws. What could the central bank have done in the absence of independence? Without independence, the governor could be replaced at the will of the government, and so could members of the Policy Board. It was tradition that the change in monetary policy had to be negotiated with the Ministry of Finance (and prime minister), although by law the Policy Board at the Bank of Japan could decide on its own power. Even lowering the interest rate was difficult because the Ministry of Posts and Telecommunications tended to oppose lowering the deposit rate. Increasing the interest rate, of course, was much harder. Could the governor put his job on the line to disagree with the government? Maybe that was not the Japanese style. 7.3 Monetarist Rhetoric for Independence One lesson that the Bank of Japan learned from the mistake of creating high inflation in 1973 and 1974 was to enhance de factor independence. To develop more theoretical underpinning for controlling inflation was one lesson, and to assert the danger of inflation, when met with pressure from the government, was another...
eBook - ePubUnderstanding Central Banking
The New Era of Activism
- David Jones(Author)
- 2014(Publication Date)
- Routledge(Publisher)
...1 History and Purpose of Central Banking Reduced to its essence, central banking is critical in maintaining an orderly modern economy, but it has proved to be more art than science. No matter how sophisticated the analysis of the impact of monetary policy on the financial markets and how they, in turn, influence spending, output, employment, and inflation, central banking comes down to a process of trial and error, observation and adjustment. To be sure, only central banks have the special power to increase aggregate liquidity in their respective financial systems. Moreover, reasonably independent central banks like our Federal Reserve (the Fed) can react more promptly to financial crises than slow-moving legislatures or other government agencies on the fiscal side. Nevertheless, when fighting financial crises, it has been the Bernanke Fed’s artful innovation, timing, and the unexpectedly large scale of its actions that have saved the day, steering us away from a second Great Depression while rebuilding shattered market confidence. In short, it was Fed chairman Ben Bernanke’s willingness “to do whatever it takes” that kept the U.S. economy afloat, as emphasized by David Wessel in his excellent book, In FED We Trust: Ben Bernanke’s War on The Great Panic (2009). L ENDER OF L AST R ESORT Traditionally, central banks have been viewed as lenders of last resort. The central bank is the institution that your commercial bank turns to in a financial crisis when it is under assault by depositors and short-term bank debt holders demanding immediate cash in return for these bank liabilities. The Bank of England—founded in 1694 as the nation’s official bank, early debt manager, and clearinghouse—has successfully refined its role as a lender of last resort over the years and thus could be considered the bloodline ancestor of modern central banking. The Bank of England was nationalized in 1946, and subsequently became an independent public organization in 1997...
eBook - ePubUnconventional Monetary Policy and Financial Stability
The Case of Japan
- Alexis Stenfors, Jan Toporowski, Alexis Stenfors, Jan Toporowski(Authors)
- 2020(Publication Date)
- Routledge(Publisher)
...1 The Japan Premium and the first stage of the monetary transmission mechanism Alexis Stenfors 1 Introduction Japan has taken unconventional monetary policy and financial stability measures to the extreme – ultimately with the aim to recover the dynamism of the Japanese economy. In order to understand the logic underpinning these measures, it is necessary to study the history and process which resulted in them being adopted. Put differently, why were conventional policy measures inadequate? This chapter focuses on the interest rate channel and the first stage of the monetary transmission mechanism, which is central to the traditional view of central banking. Namely, if the central bank changes the official interest rate, banks will adjust their interest rates accordingly. Coupled with the expectations of future central bank interest rate changes, and a host of other factors influencing markets, interest rates with longer maturities are also to be affected. Ultimately, the central bank monetary policy decision should have an impact on banks, businesses, households and variables in the economy as a whole – such as inflation, employment and output. Central banks do not determine at which interest rate banks lend to each other, or, indeed, to other agents in the economy. The first stage of the monetary transmission mechanism is therefore crucial, as it involves the immediate response to a central bank decision by banks and other financial market participants. A breakdown of the first stage of the monetary transmission mechanism is serious, as it seriously undermines the ability of central banks to conduct monetary policy or even influence expectations by market participants. Consequently, variables and indicators used to measure and decompose risks in the interbank market are crucial for central bankers. For Japan, this became evident during the Japanese banking crisis – when the strains in the interbank market triggered the so-called Japan Premium...
