Bank of Japan

Haruhiko Kuroda Japanese yen Japan Mint
Bank of Japan
日本銀行 (in Japanese)
HeadquartersChūō, Tokyo, Japan
Coordinates35°41′10″N 139°46′17″E / 35.6861°N 139.7715°E / 35.6861; 139.7715
EstablishedJune 27, 1882 /
October 10, 1882
OwnershipGovernment of Japan (55%; 100% voting interest)
Public float (45%)[1]
Traded as: JASDAQ8301
GovernorHaruhiko Kuroda
(March 20, 2013 - )
Central bank of Japan
CurrencyJapanese yen
JPY (ISO 4217)
Reserves1 179 500 million USD[1]
Bank rate-0.10%[2]

The Bank of Japan (日本銀行, Nippon Ginkō, BOJ, JASDAQ8301) is the central bank of Japan.[3] The bank is often called Nichigin (日銀) for short. It has its headquarters in Chūō, Tokyo.[4]


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.[5] 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).[6] A number of modifications based on other national banks were encompassed within the regulations under which the bank was founded.[7] 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.[8]

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,[9] 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.


The Bank of Japan was reorganized in 1942[3] (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.[3]

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.[10]

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).[11]

A major 1997 revision of the Bank of Japan Act [jp] was designed to give it greater independence;[12] however, the Bank of Japan has been criticized for already possessing excessive independence and lacking in accountability before this law was promulgated.[13] 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.[14]

The trail of policies

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, 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 qualitative 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). [15]

Curbing deflation

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 October 30, 2012, The Bank of Japan announced that it would undertake further monetary-easing action for the second time in a month.[16] 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.[17] 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.[18]


The place of the foundation of the Bank of Japan

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
Haruhiko Kuroda at ADB Philippines (crop).jpg
Haruhiko Kuroda

since March 20, 2013
StyleHis Excellency
AppointerThe Prime Minister
Term lengthFive years
Inaugural holderYoshihara Shigetoshi
FormationOctober 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.[19]

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[20]
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 12, 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 April 9, 2018, the board responsible for setting monetary policy consisted of the following 9 members:[21]

  1. Haruhiko Kuroda, Governor of the BOJ
  2. Masayoshi Amamiya, Deputy Governor of the BOJ
  3. Masazumi Wakatabe, Deputy Governor of the BOJ
  4. Yutaka Harada
  5. Yukitoshi Funo
  6. Makoto Sakurai
  7. Takako Masai
  8. Hitoshi Suzuki
  9. Goushi Kataoka

Subsidiaries and properties

Bank of Japan owns 4.7% of the Tokyo Stock Exchange[22]

See also


  1. ^ a b
  2. ^ "Home : 日本銀行 Bank of Japan". Bank of Japan. Retrieved 4 August 2019.
  3. ^ a b c Nussbaum, Louis Frédéric. (2005). "Nihon Ginkō" in Japan encyclopedia, p. 708., p. 708, at Google Books
  4. ^ "Guide Map to the Bank of Japan Tokyo Head Office Archived 2009-06-04 at the Wayback Machine." Bank of Japan. Retrieved on December 22, 2009.
  5. ^ Nussbaum, "Banks", Bank of Japan, p. 69, at Google Books.
  6. ^ 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.
  7. ^ Longford, Joseph Henry. (1912). Japan of the Japanese, p. 289.
  8. ^ Cargill, Thomas et al. (1997). The political economy of Japanese monetary policy, p. 10.
  9. ^ Nussbaum, "Banks", Bank of Japan, p. 70, at Google Books
  10. ^ Cargill, p. 197.
  11. ^ 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.
  12. ^ Cargill, p. 19.
  13. ^ 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 West Germany, vol. 1, Macroeconomic Conditions and Policy Responses, London: Macmillan. Werner, Richard (2005), New Paradigm in Macroeconomics, London: Macmillan.
  14. ^ See rebuffed requests by the government representatives at BOJ policy board meetings: e.g. "Archived copy". Archived from the original on 2007-11-17. Retrieved 2010-09-09.CS1 maint: archived copy as title (link) or refusals to increase bond purchases: Bloomberg News.
  15. ^ Kuroda Haruhiko(2013)財政金融政策の成功と失敗
  16. ^ "Bank of Japan Expands Asset-Purchase Program". The Wall Street Journal.
  17. ^ Riley, Charles (April 4, 2013). "Bank of Japan takes fight to deflation". CNN.
  18. ^ 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.
  19. ^ "Japan: The Great Reflation Play Of 2013". 2013-03-15. Retrieved 2013-03-21.
  20. ^ Masaoka, Naoichi. (1914). Japan to America, p. 127.
  21. ^ "Policy Board : 日本銀行 Bank of Japan". Retrieved 30 April 2018.
  22. ^ "Bank of Japan to be top shareholder of Japan stocks". Retrieved 20 April 2020.