2011年8月23日火曜日

BOJ Chief Gets Vocal About Economic Woes - Wall Street Journal

TOKYO—As politicians put increasing pressure on the Bank of Japan to do more to fix the economy and counter the strong yen, the central bank's leader has a few words of his own.

Gov. Masaaki Shirakawa, a former academic known for his soft-spoken ways, has become increasingly aggressive—in public and in closed-door government meetings—in stepping outside his official boundaries of monetary policy, offering his views on how policy makers could act to fix the country's economy, or at least stop making conditions worse.

0823bojBloomberg News Bank of Japan Gov. Masaaki Shirakawa speaking at a news conference earlier this month.

At a meeting this spring with economic ministers after the March 11 earthquake and tsunami, Mr. Shirakawa expressed concern about the messy way the government was handling the future of Tokyo Electric Power Co., the operator of the crippled Fukushima Daiichi nuclear plant. He warned officials that power companies across the country may face difficulty raising funds as they get shut out of the corporate bond market, as Tepco's bonds were plummeting, according to government officials who attended the meeting.

At a meeting with Cabinet ministers on Aug. 3, Mr. Shirakawa sounded a warning that Japan wasn't immune from a sell-off of its bonds, as seen in European countries when investors became concerned about fiscal conditions there.

While Japan's outstanding debt is significantly higher than the struggling European nations, Tokyo hasn't faced the same global market pressure because about 95% of Japanese government bonds are held domestically. Mr. Shirakawa warned the elected leaders that they shouldn't be so complacent, and that the notion that Japanese government bonds were immune from global uncertainty was "wrong," according to Economy Minister Kaoru Yosano, who attended the meeting. And if Japanese investors suffer losses from their U.S. Treasury holdings, Mr. Shirakawa told the group, they might sell Japanese bonds to cover those losses.

While some Japanese politicians have pushed to move away from nuclear power, the BOJ chief has sounded a warning against shutting down all nuclear power plants, pointing out how that could hit not only the economy but could also accelerate moves by businesses to shift production overseas, which would lower Japan's growth potential.

Mr. Shirakawa's wide-ranging opining has drawn some complaints from politicians and economists—especially those who think he should be doing more instead with his primary responsibility of monetary policy.

"The BOJ's independence does not mean that it can allow the bank to make outspoken remarks on the government and its industrial policy." said Yoichi Kaneko, a member of parliament from the ruling Democratic Party of Japan, who has been one of Mr. Shirakawa's outspoken critics.

"It sounds to me that the BOJ emphasizes the fact that there's not much left on its monetary policy and that it is making excuses," said Takeshi Minami, chief economist at Norinchukin Research Institute.

But Mr. Shirakawa has his defenders as well.

"A central bank governor in any country is allowed to speak on things beyond monetary policy," said Masaaki Kanno, a former BOJ official and now managing director of J.P.Morgan in Tokyo.

"Given the critical situation in Japan, I want the BOJ governor to sound an alarm bell and speak out even more than now to the public," he said.

A BOJ spokesman declined to comment.

Mr. Shirakawa's expansiveness comes as Japanese political leaders are becoming increasingly vocal about BOJ policy—sometimes seen as an intrusion on the central bank's independence. In particular, some are pressing for the BOJ to try harder to curb the yen's strength, seen as a drag on the country's exporters.

While the Finance Ministry has intervened in currency markets to try and prop the dollar up, most economists think that can be effective in the longer-run only if the BOJ also floods the economy with more yen to try and cheapen the Japanese currency. Even Finance Minister Yoshihiko Noda, who has usually been careful to respect the BOJ's independence, took the unusual step this month of commenting on monetary policy, saying in a speech that if the U.S. Federal Reserve eases again soon, "I think it's probable that the Bank of Japan will take an additional monetary easing step."

While BOJ officials have said they are willing to consider further action, they've also repeatedly emphasized the limits of just how much further they think they can go.

The BOJ strongly opposes changing Japanese law to allow underwriting of government debt—a practice currently banned—saying it would lead to a limitless issuance of debt and undermine confidence in the yen, as well as prompting a spike in long-term interest rates and inflation.

But many lawmakers see it as a way to avoid raising taxes when funds are necessary for reconstruction from the March disasters.

Mr. Kaneko, the parliamentary critic and part of a group of 200 lawmakers pushing for the BOJ to help pay for rebuilding, saysid "It is quite doubtful that a one-time underwriting of the government debt by the BOJ with the amount of ¥20 trillion ($261 billion), for instance, will undermine confidence in the yen." The BOJ, he added, referring to Japanese government bonds, "should either underwrite reconstruction bonds or boost its JGB purchases in the secondary market."


View the original article here

0 件のコメント:

コメントを投稿