What is the result of the BOJ Governor Kuroda's "other dimension" mitigation, which is the longest in history beyond the "pope"?

September 28, 10:56

On September 29, the number of days in office of Governor Kuroda of the Bank of Japan will be the highest in history.

It has greatly contributed to the postwar economic recovery and is also to break the record of the person who was also called the "Pope" of the Bank of Japan.

It has been eight and a half years since we embarked on an unprecedented “different dimension” of monetary easing.

What kind of results will the “longest president of all time” have on the Japanese economy?

(Daisuke Nogami, Reporter, Ministry of Economic Affairs)

The number of days in office exceeds "Pope"

Hisato Ichimada, the 18th president, who was once called the "Pope" because of his strong influence on finance and industry, was the longest-serving president until Kuroda renewed the top position. ..



Mr. Ichimada served as president for more than eight years from June 1946, when he was under occupation after the end of World War II.

Immediately after taking office, I asked Mr. MacArthur, Supreme Commander of the Allied Forces General Headquarters, for a meeting and said, "I want you to know the actual situation of the Japanese economy. There is an episode that he frankly said, "It's fine."



Based on the lessons learned from Germany's hyperinflation (surge in prices in a short period of time) after World War I, which caused social turmoil, after taking office, the economy was stabilized after the war by first tightening monetary policy to curb inflation. I tried to.

On the other hand, when GHQ's special adviser Joseph Dodge implements an austerity policy (= Dodge Line), it also supports the reconstruction of the industry by increasing lending to banks and supplying funds to the private sector so that the Japanese economy does not become deflationary.



He is also called the "Pope" because of his strong influence, and he is a representative of the postwar business world, such as serving as the Minister of Finance after resigning as president.

Introduced "different dimension relaxation"

Haruhiko Kuroda, the governor of the Bank of Japan, has set a new record for the BOJ's legend, the Pope.

How will it be evaluated from posterity?



Speaking of Governor Kuroda, it is a large-scale monetary easing called "Kuroda Bazooka" that was launched immediately after taking office.

Since then, it has continued to implement monetary policies that have not been implemented by central banks in major countries such as the Bank of Japan.

Traditional monetary policy involves monetary easing by raising or lowering the policy interest rate.



Immediately after taking office, Governor Kuroda launched a "non-traditional" policy to supply a large amount of funds to the market in a short period of time through the purchase of government bonds.



When Kuroda took office, the Japanese economy was facing deflation (falling prices) and the resulting economic downturn.



Under such circumstances, the Bank of Japan, the central bank, has set a clear goal of "a price increase of 2% in about two years" and expressed a strong commitment to do anything for that purpose.

By "working directly on people's expectations" and increasing the amount of money circulating in the world at once, we aimed to get rid of deflation, raise prices continuously, and put the economy on a growth track.



Both "quality" and "quantity" are different from the methods used in the past, so they were also called "different dimension relaxation".

After that, in 2016, we introduced the first "negative interest rate policy" in the history of the Bank of Japan and strengthened easing.

Furthermore, in addition to making short-term interest rates negative, we have introduced a new framework called "yield curve control" that keeps long-term interest rates at around 0%.



However, the inflation rate still did not reach 2%, and in 2018, the second term, the Bank of Japan stopped indicating when the price target of 2% was achieved, and large-scale monetary easing is long-term. I entered the war.



Since last year, in response to the spread of the new coronavirus infection, we have raised the upper limit for purchasing government bonds and other items to support the economy.



In the words of Governor Kuroda, the situation is that monetary easing is being continued "persistently" while changing its shape toward achieving the price target of 2%.



According to the latest outlook released by the Bank of Japan in July, the inflation rate in 2023, when Kuroda's term ends, is expected to be "plus 1.0%", and there is no prospect of achieving the target.



Looking back on his term of office, Governor Kuroda said:

Governor Kuroda


"We continue to persevere in significant monetary easing, but if we did not do this, economic growth and inflation would be even lower, and employment would not have expanded so much. Monetary policy management was correct. "

What is the expert evaluation?

There are various views among experts on Kuroda's monetary policy over the last eight and a half years.



"Correcting the appreciation of the yen and depreciation of stocks"

Mr. Nagahama


"Immediately after taking office, by implementing bold monetary easing measures that exceeded market expectations, we corrected the extreme appreciation of the yen and depreciation of stocks, and revitalized the Japanese economy."



Before taking office as Governor Kuroda (as of March 1, 2013), the Japanese economy was suffering from a strong yen and a slump in stock prices, with the foreign exchange market at the 92 yen level and the Nikkei Stock Average at the 11,600 yen level.

Mr. Nagahama was a Kuroda Bazooka, and the yen depreciated and stock prices rose at once. I point out that I turned it around.

"Concerns about market distortion"

Mr. Hayakawa


"I can appreciate the bold implementation of the mitigation measures, but the problem was that I did not prepare Plan B after the price target of 2% could not be achieved. I had to keep buying a ridiculous amount of assets. As a result, the BOJ's distortion of the market became more of a concern. "

Various "side effects" have been pointed out due to the prolonged large-scale monetary easing.



The Bank of Japan's assets are increasing year by year, and its total assets amount to 716 trillion yen (as of the end of June), which exceeds 130% of Japan's GDP = gross domestic product.

Compared to the Federal Reserve Board of Governors in the United States and the ECB in Europe, the number is outstanding, and you can see how the easing has been expanded.

In particular, government bonds hold more than 540 trillion yen, which is 40% of the total (as of the end of June).

There are concerns that the government will lose its fiscal discipline because it can issue government bonds at extremely low interest rates, and that the BOJ will continue to buy large amounts of government bonds, which will result in the loss of the market function that determines long-term interest rates. Is also out.



It has been pointed out that the amount of ETFs held by the Bank of Japan is 51 trillion yen (as of the end of March), which is 7% of the market capitalization of listed stocks on the First Section of the Tokyo Stock Exchange, distorting market price formation.

In addition, if the assets held by the Bank of Japan swell to this extent, there are concerns that the impact on financial markets will increase in the so-called “exit policy” that will reduce monetary easing in the future.



How to make a soft landing will be an important issue in the future.

"Proving the limits of monetary easing"

Mr. Kadoma


"Monetary policy entered the era of New Normal in the era of Governor Kuroda, and achieved some success in getting out of deflation. However, the biggest goal of raising prices by 2% is to be realized only by monetary policy. Was difficult, and it was eight years that proved that monetary easing was limited. It will be difficult to achieve in the next five or ten years. "

It has also been pointed out that ultra-low interest rates have the side effect of squeezing the profits of financial institutions by reducing the "margin" of loans to companies.



Mr. Kadoma, who served as a director of the Bank of Japan under Governor Kuroda, pointed out that "Initially, we seriously aimed to achieve the goal, but in the latter five years, consideration for side effects became the center of our policy." I am.



On top of that, "Stock prices have improved and corporate profits have risen, but in order to recover the economy, it is important to raise wages and use them for household income. Not only the BOJ's monetary policy, but also more. Broad discussion will be needed. "

The remaining term, beyond

Kuroda's second term is until April 2023.

It will be difficult to reach the price target of 2% during the remaining one and a half years, but Kuroda said, "I don't need to do anything during my term. It will be after 2024. We can't help but we can achieve our goal, "he said, indicating that he would continue to" persistently "continue monetary easing.

Since the response to side effects and exit policies is not straightforward, it can be said that the evaluation as the longest governor of the Bank of Japan in history depends on future efforts.



Meanwhile, the United States, which has been easing monetary policy in response to corona, has already shown an exit policy, and the world is about to move into a post-corona economy.



In order for the Japanese economy to get on a full-scale growth trajectory, it is necessary not only to rely on the BOJ's monetary policy, but also to take measures by governments and companies to raise the economic strength by raising wages and improving productivity. There is no doubt that it has become.

Reporter of the Ministry of Economic Affairs


Daisuke Nogami


Joined the


Department of Economic Affairs in


2010 After

working at the Kanazawa Bureau, the Ministry of Economic Affairs is

currently in charge of the financial industry.

Keywords: