Tales from a Japanese Central Banker
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Bibliographic details
- Authors: VITOR GASPAR
- Published: December 3, 2021
Overview
- Insider account by Masaaki Shirakawa of central bank policies and interactions within the government and Parliament.
- Emphasizes central banking in an environment of a declining population, low growth, and low interest rates.
- Notes Japan as an early case study for unconventional monetary policy when constrained by the zero lower bound.
Key themes and findings
- Monetary policy constraints:
- "The shadow of zero rates was already apparent by 1995."
- "Since 1999, monetary policymaking in Japan has been dominated by the zero lower bound, forcing the BOJ to explore unconventional monetary policy instruments and expand its balance sheet."
- Political economy of central banking:
- Shirakawa recounts candid interactions within the government and Parliament.
- Two lengthy chapters focus on anxieties of a central bank governor in a highly political environment.
- A chapter on demographics highlights that "as the electorate ages, a gray hair democracy has emerged, making reform more difficult."
- Broader view of central bank objectives:
- In "What Should We Expect of the Central Bank?" Shirakawa argues that the first goal of the central bank is financial stability, even before price stability, challenging the conventional primacy of price stability.
- Japan as a policy guide:
- Japan's experience provided early guidance for policy initiatives later followed by many other advanced economy central banks.
Notable chapters and insights
- "My last month in office" — reflects the long and difficult process that led to a joint statement by the government and the BOJ.
- Demographics chapter — author’s retrospective acknowledgment that his younger self overlooked the political and social relevance of demographics.
- "What Should We Expect of the Central Bank?" — favored chapter that examines theory and practice of central banking beyond monetary policy.
Context and significance
- Masaaki Shirakawa’s tenure at the Bank of Japan spans four decades, from 1972 to 2013, encompassing:
- Post-war economic transformation, a bubble economy that inflated and burst, and subsequent "lost decades."
- External challenges including the global financial crisis and the economic rise of China:
- "In 2000, China’s economy was one-quarter the size of Japan’s, but by 2015 it was twice as big."
- The book is described as "full of insightful information in short, self-contained chapters" and "indispensable reading" for those interested in central banking under demographic decline and low interest rates.
- Milton Friedman quote reproduced: “Monetary theory is like a Japanese garden. It has esthetic unity born of variety; an apparent simplicity that conceals a sophisticated reality; a surface view that dissolves in ever deeper perspectives.”
Publication details
- F&D Magazine
- Author of review: VITOR GASPAR
- "VITOR GASPAR, is the Special Advisor to the Managing Director, until the end of the month of November."
- Book: Tumultuous Times: Central Banking in an Era of Crisis
- Masaaki Shirakawa
- Yale University Press, New Haven, CT, 2021, 536 pp., $40.00
- Review date: December 2021
- Reading time indicator on page: "Less than a minute(0 words) Read"
Tales from a Japanese Central Banker — F&D Magazine review by VITOR GASPAR, December 2021.
Content in this bundle
- استعراض الكتب
- Managing Upheavals
- Críticas de libros ● Finanzas y Desarrollo ● Diciembre de 2021
- Notes de lecture
- Управление потрясениями