Headquarters in Tokyo
|Headquarters||Chūō, Tokyo, Japan|
|Established||27 June/10 October 1882|
|Ownership|| Government of Japan (55%; 100% voting interest)|
Public float (45%)
Traded as: TYO: 8301
|Governor|| Kazuo Ueda |
(9 April 2023 – present)
|Central bank of||Japan|
|Currency|| Japanese yen |
JPY (ISO 4217)
|Reserves||1 179 500 million USD|
The Bank of Japan (日本銀行, Nippon Ginkō, BOJ, JASDAQ: 8301) is the central bank of Japan. The bank is often called Nichigin (日銀) for short. It has its headquarters in Chūō, Tokyo.
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.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 (10 October 1882), under the Bank of Japan Act 1882 (27 June 1882), after a Belgian model. It has since been partly privately owned (its stock is traded over the counter, hence the stock number). A number of modifications based on other national banks were encompassed within the regulations under which the bank was founded. 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.
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,and in 1899 the former "national" banknotes were formally phased out.
Since its Meiji era beginnings, the Bank of Japan has operated continuously from main offices in Tokyo and Osaka.
The Bank of Japan was reorganized in 1942 Bank of Japan Act of 1942 (日本銀行法 昭和17年法律第67号), promulgated on 24 February 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.(fully only after 1 May 1942), under the
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.
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).
A major 1997 revision of the Bank of Japan Act was designed to give it greater independence;however, the Bank of Japan has been criticized for already possessing excessive independence and lacking in accountability before this law was promulgated. A certain degree of dependence might be said to be enshrined in the new Law, article 4 of which states:
However, since the introduction of the new law, the Bank of Japan has rebuffed government requests to stimulate the economy.
When the Nixon shock happened in August 1971, the Bank of Japan (BOJ) could have appreciated the currency in order to avoid inflation. However, they still kept the fixed exchange rate as 360Yen/$ for two weeks, so it caused excess liquidity. In addition, they persisted with the Smithsonian rate (308Yen/$), and continued monetary easing until 1973. This created a greater-than-10% inflation rate at that time. In order to control stagflation, they raised the official bank rate from 7% to 9% and skyrocketing prices gradually ended in 1978.
In 1979, when the energy crisis happened, the BOJ raised the official bank rate rapidly. The BOJ succeeded in a quick economic recovery. After overcoming the crisis, they reduced the official bank rate. In 1980, the BOJ reduced the official bank rate from 9.0% to 8.25% in August, to 7.25% in November, and to 5.5% in December in 1981. "Reaganomics" was in vogue in America and USD became strong. However, Japan tried to implement fiscal reconstruction at that time, so they did not stop their financial regulation.
In 1985, the agreement of G5 nations, known as the Plaza Accord, USD slipped down and Yen/USD changed from 240yen/$ to 200yen/$ at the end of 1985. Even in 1986, USD continued to fall and reached 160yen/$. In order to escape deflation, the BOJ cut the official bank rate from 5% to 4.5% in January, to 4.0% in March, to 3.5% in April, 3.0% in November. At the same time, the government tried to raise demand in Japan in 1985, and did economy policy in 1986. However, the market was confused about the rapid fall of USD. After the Louvre Accord in February 1987, the BOJ decreased the official bank rate from 3% to 2.5%, but JPY/USD was 140yen/$ at that time and reached 125yen/$ in the end of 1987. The BOJ kept the official bank rate at 2.5% until May in 1989. Financial and fiscal regulation led to a widespread over-valuing of real estate and investments and Japan faced a bubble at that time.
After 1990, the stock market and real asset market fell. At that time BOJ regulated markets until 1991 in order to end the bubble.
In January 1995, a terrible earthquake happened and Japanese yen became stronger and stronger. JPY/USD reached 80yen/$, so the BOJ reduced the office bank rate to 0.5% and the yen recovered. The period of deflation started at that time.
In 1999, the BOJ started zero-interest-rate policy (ZIRP), but they ended it despite government opposition when the IT bubble happened in 2000. However, Japan's economic bubble burst in 2001 and the BOJ adopted the balance of current account as the main operating target for the adjustment of the financial market in March 2001 (quantitative relaxation policy), shifting from the zero-interest-rate policy. From 2003 to 2004, Japanese government did exchange intervention operation in huge amount, and the economy recovered a lot. In March 2006, BOJ finished quantitative easing, and finished the zero-interest-rate policy in June and raised to 0.25%.
In 2008, the financial crisis happened, and Japanese economy turned bad again. BOJ reduced the uncollateralized call rate to 0.3% and adopted the supplemental balance of current account policy. In December 2008, BOJ reduced uncollateralized call rate again to 0.1% and they started to buy Japanese Government Bond (JGB) along with commercial paper (CP) and corporate bonds.
In 2013, the head of the BOJ (Kuroda) announced a new quantitative easing program (QE). This program would be very large in terms of quantity, but it would also be different in terms of quality—qualitative easing (QQE). In other words, the BOJ would (and did) also purchase riskier assets like stocks and REITs.
In 2016, the BOJ initiated yield curve control (YCC).
In 2016, the BOJ started its negative interest rates policy (NIRP).
They are the largest owner of Japanese stocks.
Following the election of Prime Minister Shinzō Abe in December 2012, the Bank of Japan, with Abe's urging, took proactive steps to curb deflation in Japan. On 30 October 2012, The Bank of Japan announced that it would undertake further monetary-easing action for the second time in a month.Under the leadership of new Governor Haruhiko Kuroda, the Bank of Japan released a statement on 5 April 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. But by 2016, it was apparent that three years of monetary easing had had little effect on deflation so the Bank of Japan instigated a review of its monetary stimulus program.
According to its charter, the missions of the Bank of Japan are
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.
|Governor of the Bank of Japan|
|Appointer||The Prime Minister|
|Term length||Five years|
|Inaugural holder||Yoshihara Shigetoshi|
|Formation||6 October 1882|
The governor of the Bank of Japan (総裁, sōsai) has considerable influence on the economic policy of the Japanese government.
|#||Governor||Took office||Left office|
|1||Yoshihara Shigetoshi||6 October 1882||19 December 1887|
|2||Tomita Tetsunosuke||21 February 1888||3 September 1889|
|3||Kawada Koichiro||3 September 1889||7 November 1896|
|4||Iwasaki Yanosuke||11 November 1896||20 October 1898|
|5||Tatsuo Yamamoto||20 October 1898||19 October 1903|
|6||Shigeyoshi Matsuo||20 October 1903||1 June 1911|
|7||Korekiyo Takahashi||1 June 1911||20 February 1913|
|8||Yatarō Mishima||28 February 1913||7 March 1919|
|9||Junnosuke Inoue (First)||13 March 1919||2 September 1923|
|10||Otohiko Ichiki||5 September 1923||10 May 1927|
|11||Junnosuke Inoue (Second)||10 May 1927||12 June 1928|
|12||Hisaakira Hijikata||12 June 1928||4 June 1935|
|13||Eigo Fukai||4 June 1935||9 February 1937|
|14||Seihin Ikeda||9 February 1937||27 July 1937|
|15||Toyotaro Yuki||27 July 1937||18 March 1944|
|16||Keizo Shibusawa||18 March 1944||9 October 1945|
|17||Eikichi Araki (First)||9 October 1945||1 June 1946|
|18||Hisato Ichimada||1 June 1946||10 December 1954|
|19||Eikichi Araki (Second)||11 December 1954||30 November 1956|
|20||Masamichi Yamagiwa||30 November 1956||17 December 1964|
|21||Makoto Usami||17 December 1964||16 December 1969|
|22||Tadashi Sasaki||17 December 1969||16 December 1974|
|23||Teiichiro Morinaga||17 December 1974||16 December 1979|
|24||Haruo Maekawa||17 December 1979||16 December 1984|
|25||Satoshi Sumita||17 December 1984||16 December 1989|
|26||Yasushi Mieno||17 December 1989||16 December 1994|
|27||Yasuo Matsushita||17 December 1994||20 March 1998|
|28||Masaru Hayami||20 March 1998||19 March 2003|
|29||Toshihiko Fukui||20 March 2003||19 March 2008|
|30||Masaaki Shirakawa||9 April 2008||19 March 2013|
|31||Haruhiko Kuroda||20 March 2013||9 April 2023|
|32||Kazuo Ueda||9 April 2023||Incumbent|
As of 9 April 2023, the board responsible for setting monetary policy consisted of the following 9 members:
Bank of Japan owns 4.7% of the Tokyo Stock Exchange.Since 2020 it has owned more of the market than any other body.
the BoJ was ranked as a top ten shareholder in some 40 per cent of all Japan's listed companies last year, according to Nikkei.
The economy of Japan is a highly developed/advanced social market economy, often referred to as an East Asian model. It is the third-largest in the world by nominal GDP and the fourth-largest by purchasing power parity (PPP). It is the world's second-largest developed economy. Japan is a member of both the G7 and G20. According to the IMF, the country's per capita GDP (PPP) was at $51,809 (2023). Due to a volatile currency exchange rate, Japan's GDP as measured in dollars fluctuates sharply. The Japanese economy is forecast by the Quarterly Tankan survey of business sentiment conducted by the Bank of Japan. The Nikkei 225 presents the monthly report of top blue chip equities on the Japan Exchange Group, which is the world's fifth-largest stock exchange by market capitalisation. In 2018, Japan was the world's fourth-largest importer and the fourth-largest exporter. It has the world's second-largest foreign-exchange reserves, worth $1.4 trillion. It ranks 5th on the Global Competitiveness Report. It ranks first in the world in the Economic Complexity Index. Japan is also the world's fourth-largest consumer market.
The yen is the official currency of Japan. It is the third-most traded currency in the foreign exchange market, after the United States dollar (US$) and the euro. It is also widely used as a third reserve currency after the US dollar and the euro.
In economics, deflation is a decrease in the general price level of goods and services. Deflation occurs when the inflation rate falls below 0%. Inflation reduces the value of currency over time, but sudden deflation increases it. This allows more goods and services to be bought than before with the same amount of currency. Deflation is distinct from disinflation, a slow-down in the inflation rate, i.e. when inflation declines to a lower rate but is still positive.
The Plaza Accord was a joint–agreement signed on September 22, 1985, at the Plaza Hotel in New York City, between France, West Germany, Japan, the United Kingdom, and the United States, to depreciate the U.S. dollar in relation to the French franc, the German Deutsche Mark, the Japanese yen and the British pound sterling by intervening in currency markets. The U.S. dollar depreciated significantly from the time of the agreement until it was replaced by the Louvre Accord in 1987. Some commentators believe the Plaza Accord contributed to the Japanese asset price bubble of the late 1980s.
Zero interest-rate policy (ZIRP) is a macroeconomic concept describing conditions with a very low nominal interest rate, such as those in contemporary Japan and in the United States from December 2008 through December 2015. ZIRP is considered to be an unconventional monetary policy instrument and can be associated with slow economic growth, deflation and deleverage.
Masaru Hayami was a Japanese businessman, central banker, the 28th Governor of the Bank of Japan (BOJ) and a Director of the Bank for International Settlements (BIS).
The Japanese asset price bubble was an economic bubble in Japan from 1986 to 1991 in which real estate and stock market prices were greatly inflated. In early 1992, this price bubble burst and Japan's economy stagnated. The bubble was characterized by rapid acceleration of asset prices and overheated economic activity, as well as an uncontrolled money supply and credit expansion. More specifically, over-confidence and speculation regarding asset and stock prices were closely associated with excessive monetary easing policy at the time. Through the creation of economic policies that cultivated the marketability of assets, eased the access to credit, and encouraged speculation, the Japanese government started a prolonged and exacerbated Japanese asset price bubble.
Quantitative easing (QE) is a monetary policy action where a central bank purchases predetermined amounts of government bonds or other financial assets in order to stimulate economic activity. Quantitative easing is a novel form of monetary policy that came into wide application after the financial crisis of 2007–2008. It is used to mitigate an economic recession when inflation is very low or negative, making standard monetary policy ineffective. Quantitative tightening (QT) does the opposite, where for monetary policy reasons, a central bank sells off some portion of its holdings of government bonds or other financial assets.
Masaaki Shirakawa is a Japanese economist and the 30th Governor of the Bank of Japan (BOJ), and professor at Aoyama Gakuin University. He is also a Director and Vice-Chairman of the Bank for International Settlements (BIS).
Takatoshi Ito is a Japanese economist. He is a professor of the School of International and Public Affairs, Columbia University and a senior professor of the National Graduate Institute for Policy Studies.
Currency intervention, also known as foreign exchange market intervention or currency manipulation, is a monetary policy operation. It occurs when a government or central bank buys or sells foreign currency in exchange for its own domestic currency, generally with the intention of influencing the exchange rate and trade policy.
The Lost Decade was a period of economic stagnation in Japan caused by the asset price bubble's collapse in late 1991. The term originally referred to the 1990s, but the 2000s and the 2010s have been included by commentators as the phenomenon continued.
The 1 yen note (1円券) was a denomination of Japanese yen in seven different series from 1872 to 1946 for use in commerce. These circulated with the 1 yen coin until 1914, and briefly again before the notes were suspended in 1958. Notes from the Japanese government, known as "government notes," were the first to be issued through a company in Germany. Because they were being counterfeited, they were replaced by a new series which included the first portrait on a Japanese banknote. Almost concurrently, the government established a series of national banks modeled after the system in the United States. These national banks were private entities that also released their own notes which were later convertible into gold and silver. All three of these series came to an end due to massive inflation from the Satsuma Rebellion in 1877. National bank notes were re-issued as fiat currency before the national banks themselves were abolished. Both national bank and government one yen notes were gradually redeemed for Bank of Japan note starting in 1885. This redemption process lasted until all three series were abolished in 1899.
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Yasushi Mieno was a Japanese businessman, central banker, the 26th Governor of the Bank of Japan (BOJ) and a Director of the Bank for International Settlements (BIS).
Haruhiko Kuroda is a Japanese banker and a former Ministry of Finance government official who served as the 31st Governor of the Bank of Japan (BOJ) from March 2013 to April 2023 and is currently a Professor at the National Graduate Institute for Policy Studies (GRIPS). From 2003 Mr Kuroda served as Special Advisor to the Cabinet of Prime Minister Koizumi, while teaching economics and finance as a Professor at the Hitotsubashi University Graduate School of Economics. He was formerly the President of the Asian Development Bank from 1 February 2005 to 18 March 2013.
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The 2 yen note (2円券) was a denomination of Japanese yen issued in two different overlapping series from 1872 to 1880 for use in commerce. Meiji Tsūhō "two yen" notes were the first to be released as inconvertible government notes in 1872. These notes were produced both domestically, and in Germany using western technology. While they had an elaborate design, the notes eventually suffered in paper quality, and were counterfeited. Two yen Meiji Tsūhō notes were not redesigned with other denominations in response to these issues. The series as a whole was effected by massive inflation that occurred during the aftermath of the Satsuma Rebellion in 1877. Too many non convertible notes had been issued to pay for the expenses incurred. Government notes stopped being issued in 1879, and the Bank of Japan was established in 1882 as a way to redeem old notes for new ones issued by the bank. This redemption period expired when the notes were abolished on December 9, 1899.
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