Economic news

BOJ must be cautious about changing easy money policy too soon – ex-MOF Nakao

2023.04.06 23:33


© Reuters. FILE PHOTO: Takehiko Nakao, former vice finance minister for international affairs and former president of Asian Development Bank, speaks during an interview with Reuters in Tokyo, Japan December 27, 2022. REUTERS/Issei Kato

By Tetsushi Kajimoto and Yoshifumi Takemoto

TOKYO (Reuters) – The Bank of Japan (BOJ) should be cautious about changing its unconventional monetary policy for now, given financial market uncertainty due to problems in Western banks, former top financial diplomat Takehiko Nakao told Reuters in an interview.

Nakao made the comments amid speculation the BOJ may abandon its yield curve control policy when new Governor Kazuo Ueda takes over incumbent Haruhiko Kuroda, whose term ends on April 8.

U.S. bank failures and the buyout of Credit Suisse by UBS last month have driven financial market risk aversion.

Nakao said the BOJ must carefully monitor market developments, for now, although credit anxiety was unlikely to morph into anything like the 2008/09 global financial crisis.

Japan needs to start making adjustments towards normalising fiscal and monetary policies as financial markets stabilise, because prolonged stimulus inhibits necessary corporate restructuring and job turnover, he said.

“The BOJ may need to tread even more cautiously in reconsidering and adjusting monetary policy in the face of new problems of financial market jitters,” said Nakao, former vice finance minister for international affairs, who coordinated with other countries in responding to the euro crisis in the 2010s.

“Yet, the BOJ cannot continue unconventional monetary policy, including ETF and REIT purchases and YCC, indefinitely. Doing so won’t be in the interest of Japan in the long run.”

Nakao was referring to the central bank’s purchases of assets such as exchange-traded funds and real estate investment trust and its policy targeting the bond yield curve.

In Japan, the risk of a prolonged easing includes excessive yen weakening and deteriorating fiscal discipline, rather than falling behind the curve in fighting inflation, Nakao said in the interview conducted on Thursday.

“Fiscal deficits and the BOJ’s assets have become so large in comparison with GDP that it could have potential risks of steep rises in interest rates and sudden currency falls, which leads to inflation.”

Nakao was the president of the Asian Development Bank from 2013 through early 2020. He is now “Chairman of the Institute” at Mizuho Research and Technologies, part of Mizuho Financial Group Inc, Japan’s third-biggest commercial bank.

Source link

Related Articles

Back to top button
bitcoin
Bitcoin (BTC) $ 68,364.32 0.92%
ethereum
Ethereum (ETH) $ 2,425.51 1.75%
tether
Tether (USDT) $ 0.999549 0.05%
bnb
BNB (BNB) $ 557.46 0.39%
solana
Solana (SOL) $ 159.92 1.58%
usd-coin
USDC (USDC) $ 1.00 0.06%
xrp
XRP (XRP) $ 0.50759 0.46%
dogecoin
Dogecoin (DOGE) $ 0.162673 7.90%
staked-ether
Lido Staked Ether (STETH) $ 2,424.44 1.69%
tron
TRON (TRX) $ 0.162664 1.58%
cardano
Cardano (ADA) $ 0.330065 0.23%
the-open-network
Toncoin (TON) $ 4.61 5.47%
wrapped-steth
Wrapped stETH (WSTETH) $ 2,861.17 2.23%
shiba-inu
Shiba Inu (SHIB) $ 0.000017 2.68%
wrapped-bitcoin
Wrapped Bitcoin (WBTC) $ 68,227.28 0.90%
avalanche-2
Avalanche (AVAX) $ 23.03 2.59%
weth
WETH (WETH) $ 2,425.60 1.76%
bitcoin-cash
Bitcoin Cash (BCH) $ 334.11 1.10%
chainlink
Chainlink (LINK) $ 10.44 2.78%
usds
USDS (USDS) $ 1.00 0.09%
leo-token
LEO Token (LEO) $ 6.05 0.17%
polkadot
Polkadot (DOT) $ 3.82 0.67%
sui
Sui (SUI) $ 1.91 1.38%
litecoin
Litecoin (LTC) $ 66.64 0.42%
near
NEAR Protocol (NEAR) $ 3.66 0.35%
wrapped-eeth
Wrapped eETH (WEETH) $ 2,551.20 1.71%
aptos
Aptos (APT) $ 8.19 0.99%
uniswap
Uniswap (UNI) $ 6.86 1.71%
pepe
Pepe (PEPE) $ 0.000008 0.62%
internet-computer
Internet Computer (ICP) $ 7.13 0.76%
dai
Dai (DAI) $ 1.00 0.04%
bittensor
Bittensor (TAO) $ 424.61 1.36%
fetch-ai
Artificial Superintelligence Alliance (FET) $ 1.14 0.03%
monero
Monero (XMR) $ 160.44 2.36%
ethena-usde
Ethena USDe (USDE) $ 1.00 0.04%
whitebit
WhiteBIT Coin (WBT) $ 18.95 0.18%
stellar
Stellar (XLM) $ 0.091317 0.24%
ethereum-classic
Ethereum Classic (ETC) $ 17.86 0.52%
kaspa
Kaspa (KAS) $ 0.104867 3.60%
first-digital-usd
First Digital USD (FDUSD) $ 0.999659 0.03%
polygon-ecosystem-token
POL (ex-MATIC) (POL) $ 0.296707 1.52%
okb
OKB (OKB) $ 37.27 0.87%
blockstack
Stacks (STX) $ 1.48 1.33%
dogwifcoin
dogwifhat (WIF) $ 2.02 1.87%
filecoin
Filecoin (FIL) $ 3.33 0.60%
aave
Aave (AAVE) $ 131.91 0.48%
crypto-com-chain
Cronos (CRO) $ 0.071282 0.38%
arbitrum
Arbitrum (ARB) $ 0.480204 0.74%
mantle
Mantle (MNT) $ 0.554504 1.09%
immutable-x
Immutable (IMX) $ 1.07 0.47%