June 17, 2019 / 12:08 PM / in 4 months

Battle of the books: An intellectual struggle is underway over the BOJ's mission

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By Leika Kihara

TOKYO, June 17 (Reuters) - The Bank of Japan’s staff bookstore underscores the intellectual battle lines in what has become a renewed debate over the central bank’s mission and a contest to define Governor Haruhiko Kuroda’s legacy.

The shelves include the dense, 758-page memoir of former governor Masaaki Shirakawa, which reads like an implicit critique of Kuroda, as well as a memoir by former deputy governor Kikuo Iwata, who retains influence inside the BOJ, and which argues Kuroda didn’t go far enough. A third book, by opposition lawmaker Mikishi Daimon, which is not in the BOJ bookstore, takes Kuroda to task over his ultra-loose monetary policy.

CENTRAL BANK: The 39-year experience of a central banker

Former BOJ Governor Masaaki Shirakawa

Published: October 2018

Pages: 758

Thesis: Shirakawa says setting an inflation target with a rigid timeframe in a country like Japan, where price growth remained subdued for a long period of time, could force the central bank to resort to excessive monetary easing. He warns that unconventional monetary measures have only a limited effect in boosting growth and could distort the economy by making an exit from ultra-easy monetary policy difficult. He also warns that it is “dangerous” for central banks to use monetary policy in an attempt to influence public expectations.

Reception: Well-read among incumbent and former BOJ officials, though some say there was not much new as Shirakawa’s aversion to the current policy was well known.

BOJ DIARY: A five-year battle with deflation

Former BOJ Deputy Governor Kikuo Iwata

Published: October 2018

Pages: 427

Thesis: Iwata blames the government’s sales tax hike in 2014 for hurting the economy and hampering the BOJ’s efforts to achieve its 2% inflation target. An architect of the BOJ’s bold monetary experiment, Iwata criticizes his former boss, Kuroda, for endorsing the tax hike, which he argues killed the chance to eradicate Japan’s deflationary mindset. He also reveals several attempts he made with others on the BOJ board to promote further easing measures, none of which materialized.

Reception: Read by many BOJ technocrats, some of whom feared that Iwata would reveal the internal deliberations of the central bank under Kuroda.

CASINO-MICS: The secrets of Abe’s private bank

Opposition lawmaker Mikishi Daimon

Published: December 2018

Pages: 235

Thesis: Known as a vocal critic of Kuroda’s radical monetary easing, Daimon argues that the BOJ became Prime Minister Shinzo Abe’s private bank as it pumped money into the economy to keep borrowing costs very low and push up asset prices. People won’t believe inflation will accelerate just because the BOJ prints money, he writes. Under pressure by the government to keep interest rates low and saddled with a huge balance sheet, the BOJ is cornered and has no easy exit strategy, he argues.

Reception: Daimon says he handed a copy to Kuroda but that the governor “probably won’t read it because it says so many bad things about his policy.”

Reporting by Leika Kihara. Edited by Peter Hirschberg.

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