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ECONOMY > Economic Policy

Policy mastermind and outspoken dove set to help steer BOJ

  • February 17, 2018
  • , Nikkei Asian Review , 7:02 a.m.
  • English Press

TOKYO — The government’s two picks for deputy governor at the Bank of Japan bring to the table different backgrounds certain to inform their approach to monetary policy for the next five years. 


BOJ Executive Director Masayoshi Amamiya, long serving in the bank’s monetary policy planning department, has “orchestrated nearly all of the policies of the last 20 years,” a senior central bank official said — a role that has earned him the nickname “Mr. BOJ.” Viewed from early in his career as a prodigious talent and trusted by Gov. Haruhiko Kuroda, he is seen internally as a candidate to succeed the central bank chief when his expected second term ends in five years.


Amamiya has a knack for thinking outside the box and devising creative policy ideas. He was involved in developing quantitative easing as a midlevel official in 2003, and he drew up the initial draft of Kuroda’s massive multipronged monetary easing program in 2013.


Skilled at communicating specialized concepts in simple language, Amamiya has cultivated numerous connections among politicians, Tokyo bureaucrats and the financial sector. He put together a team of staffers in January 2016 to create the negative interest rate policy adopted soon thereafter. When this came under fire for side effects such as eroding banks’ profits, Amamiya helped to engineer a course correction to the current yield curve control policy that September.


Amamiya’s main weakness is said to be a lack of overseas experience compared with departing Deputy Gov. Hiroshi Nakaso, who has supported Kuroda in international negotiations and partnerships with other central banks.


The other nominee, Masazumi Wakatabe, is a prominent economic commentator and advocate of reflationary policy who comes from an academic background.


The Waseda University professor is very focused on quantitative easing, a foreign analyst who sat down with him last fall observed — a position contrasting with a BOJ policy centered on interest rates. Wakatabe has advocated boosting the central bank’s annual target for Japanese government bond purchases from 80 trillion yen ($752 billion) to 90 trillion yen. His calls for quantitative easing grew even more insistent after the BOJ introduced negative interest rates, according to an academic acquainted with him.


Wakatabe also contends that Tokyo should not hit the brakes on fiscal stimulus. He reportedly proposed delaying plans to raise the consumption tax from 8% to 10% during a November 2015 meeting with Prime Minister Shinzo Abe. The hike was postponed twice to October 2019, and Wakatabe wants it pushed back again.


An academic by temperament as well as training, Wakatabe is willing to debate anyone. Many who know him report being challenged to argue about not only economic history — his specialty — but even mundane topics, day or night. This tendency has led some to question whether he has the capacity for dialogue needed to work with the bank’s rank-and-file staff.

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