Bank of Japan (BOJ) - Then and Now

The settlement of funds between financial institutions in Japan and the issuance of banknotes fall under the responsibility of the Bank of Japan (BOJ). This Tokyo-based bank is also in charge of carrying out monetary and currency control, which is meant to achieve price stability.

Thus, the BOJ greatly contributes to the development of Japan’s economy and is considered to be among the most systematically significant central banks around the world. In fact, it stands at par with the Federal Reserve System (Fed) of the United States and the European Central Bank (ECB).

Brief History of Bank of Japan

Public Domain,

As with many of Japan’s modern institutions, the Bank of Japan was established after the end of the Meiji Restoration. Before its inception, a series of mismatched denominations known as hansatsu were used by the different regions of Japan. It was only in 1871 when the yen was established through the New Currency Act.

Over a decade later, the Bank of Japan was founded through the 1882 Bank of Japan Act, which was modeled after the Belgian system. Monopoly over the supply of money was granted to the bank two years later.

In line with the Convertible Bank Note Regulations of the year 1884, the first set of banknotes was issued by the Bank of Japan in 1885. Amidst several tiny errors including how the konjac powder used in the bills for the prevention of counterfeiting served as a delicacy for rats, the banknotes were ultimately successful.

The gold standard of 1897 was participated in by Japan which ultimately led to the phasing out of these initial national banknotes in 1899.

The Bank of Japan was reorganized in 1942, before being suspended for a brief period, particularly during the Occupation of Japan when the military currency was used, instead. In 1949, the bank underwent another reorganization to adapt accordingly to the situations at hand.

The operations and policies of the Bank of Japan continued to evolve throughout the post-war era of Japan. During the 1970s, the biggest change the bank had to overcome was the transition from having a fixed currency exchange rate within a closed economy to the total opposite.

The monetary policy of the Bank of Japan during the 19th century followed a similar model to that of China’s central bank and was known as window guidance credit control. According to this policy, the increased bank credit quotas of commercial banks would be imposed by the central bank. This was implemented by the Business Department of the BOJ and greatly contributed towards Japan’s bubble economy.

In 1997, a revision was made to the Bank of Japan Act which dictated that the BOJ be given more independence. Since this was announced, the Bank of Japan has ignored the requests of the Japanese government to be more active in stimulating the economy.

The Missions of Bank of Japan

As dictated by the Bank of Japan’s charter, its missions are as follows:

  • To compile data, economic studies, and other analytical research activities

  • To oversee international activities

  • To oversee all operations related to government and treasury securities

  • To provide settlement services and ensure the financial system’s stability

  • To implement the monetary policy

  • To issue and manage banknotes

List of Governors of Bank of Japan

By Asian Development Bank [CC BY 2.0 (], via Wikimedia Commons

Sosai is the term used to refer to the Governor of the BOJ. He has a significant amount of influence when it comes to the Japanese government’s economic policies. The Bank of Japan has been handled by 31 governors, including the currently endorsed Haruhiko Kuroda.

The complete list of governors of the Bank of Japan includes the following:

  • Haruhiko Kuroda (took office from March 2013 to present)

  • Masaaki Shirakawa (took office from April 2008 to March 2013)

  • Toshihiko Fukui (took office from March 2003 to March 2008)

  • Masaru Hayami (took office from March 1998 to March 2003)

  • Yasuo Matsushita (took office from December 1994 to March 1998)

  • Yasushi Mieno (took office from December 1989 to December 1994)

  • Satoshi Sumita (took office from December 1984 to December 1989)

  • Haruo Maekawa (took office from December 1979 to December 1984)

  • Teiichiro Morinaga (took office from December 1974 to December 1979)

  • Tadashi Sasaki (took office from December 1969 to December 1974)

  • Makoto Usami (took office from December 1964 to December 1969)

  • Masamichi Yamagiwa (took office from November 1956 to December 1964)

  • Eikichi Araki (took office from October 1945 to June 1946, and again from December 1954 to November 1956)

  • Hisato Ichimada (took office from June 1946 to December 1954)

  • Keizo Shibusawa (took office from March 1944 to October 1945)

  • Toyotaro Yuki (took office from July 1937 to March 1944)

  • Seihin Ikeda (took office from February 1937 to July 1937)

  • Eigo Fukai (took office from June 1935 to February 1937)

  • Hisaakira Hijikata (took office from June 1928 to June 1935)

  • Junnosuke Inoue (took office from March 1919 to September 1923, and again from May 1927 to June 1928)

  • Otohiko Ichiki (took office from September 1923 to May 1927)

  • Yataro Mishima (took office from February 1913 to March 1919)

  • Korekiyo Takahashi (took office from June 1911 to February 1913)

  • Shigeyoshi Matsuo (took office from October 1903 to June 1911)

  • Tatsuo Yamamoto (took office from October 1898 to October 1903)

  • Iwasaki Yanosuke (took office from November 1896 to October 1898)

  • Kawada Koichiro (took office from September 1889 to November 1896)

  • Tomita Tetsunosuke (took office from February 1888 to September 1889)

  • Yoshihara Shigetoshi (took office from October 1882 to December 1887)

The Monetary Policy Board of Bank of Japan

The Bank of Japan has a board in charge of identifying the appropriate monetary policy that should be observed. As of early 2017, this Monetary Policy Board is made up of the following members:

  • Haruhiko Kuroda (BOJ Governor)

  • Kikuo Iwata (BOJ Deputy Governor)

  • Hiroshi Nakaso (BOJ Deputy Governor)

  • Yutaka Harada

  • Takahiro Sato

  • Yukitoshi Funo

  • Makoto Sakurai

  • Takahide Kiuchi

  • Takako Masai

Monitoring News Updates on Bank of Japan – Interest Rates, Exchange Rates, Balance Sheets, and Monetary Policy Meetings

By Stéfan ( [CC BY-SA 3.0 (], via Wikimedia Commons

Those interested in keeping up to date with the latest facts regarding the Bank of Japan and other financial institutions can conveniently access several online news report websites for reliable information.

Other than the website of BOJ (, the sites listed below also feature the current interest rate, exchange rate, GDP, statistic, fund advice, loan service, base outline for each corresponding statistic, and many more essential data: (

In 1996, was launched as a basic website which featured program shows, network images, and host biographies relevant to CNBC, the popular American channel. It gradually developed over time to include a news bulletin, a stock statement/quote section, deposit/payment deadlines, and other useful information. was reintroduced as a financial website in December 2006 meant to aid budding and veteran investors. The content of the website is updated every hour of the day from Monday to Friday.

The Economic Times (

Since starting in the year 1961, The Economic Times has immensely grown to be the second most read business newspaper across the globe today, following the Wall Street Journal. Its main headquarters is located in Mumbai. International finance, share prices, and commodity prices are a few of the things tackled in this English-language newspaper, which is also accessible online.

Financial Times (

The Financial Times, or FT, is an English-language international newspaper (printed and digital) that primarily focuses on economic and business news. It was founded nearly 130 years ago by Horatio Bottomley and James Sheridan. At present, the paper is owned and published by Nikkei Inc., a Tokyo-based company.

Bank of Japan in “Persona 5”, a Role-Playing Video Game

Interestingly, a popular Japanese role-playing video game known as Persona 5 mentions the Bank of Japan. The game is set in Tokyo and follows the story of the main character who transfers to the Shujin Academy.

Throughout the course of the academic year, he and several other students come to realize that they have different hidden powers known as personas. Using these powers, they defeat various supernatural enemies and steal any ill intent within adults.

Knowledge plays an important role in Persona 5 and greatly contributes to the level of the main character. The game features several classroom scenes wherein various questions need to be answered correctly. Each question is asked on a specific day, mimicking the daily recitation Japanese students experience at school.

The Bank of Japan is mentioned in the assigned problem for June 13 which asks “Paper money is issued by the Bank of Japan, but who issues the coins?”. The right answer for this is “the government”.

A Timeline of Significant Events and Policies Experienced by the Bank of Japan (Plaza Accord, Quantitative Easing, Etc.)

See page for author [Public domain], via Wikimedia Commons

The written timeline below shows a closer look at the events and trail of policies the Bank of Japan experienced throughout the years:

  • 1971 – the Nixon shock occurs but the Bank of Japan keeps its exchange rate fixed to 360 yen per dollar for up to two weeks, causing excess liquidity. Afterward, the Smithsonian rate of 308 yen per dollar is used by the Bank of Japan. All the while, monetary easing is continued until 1973.

  • 1973 – an inflation rate of more than ten percent is observed. As a solution, the official bank rate is raised from 7% to 9%.

  • 1978 – the problem of stagflation ends

  • 1979 – the Bank of Japan begins to rapidly increase its official bank rate as a means to cope with the energy crisis

  • 1980 – 1985 – the US dollar is appreciated by fifty percent against the currencies of the United Kingdom, Japan, West Germany, and France

  • August 1980 – the official bank rate is reduced from 9% to 8.25%

  • November 1980 – the official bank rate is reduced from 8.25% to 7.25%

  • December 1981 – the official bank rate is reduced from 7.25% to 5.5%

  • 1985 – the Plaza Accord is signed by the United States, the United Kingdom, Japan, West Germany, and France as a means to depreciate the value of the US dollar relative to the German Deutsche Mark and Japanese yen. By the end of the year, the exchange rate is observed to be at 200 yen per dollar – a big change from the previous rate of 240 yen per dollar.

  • January 1986 – the value of the US dollar continues to fall. As a means to escape problems with deflation, the Bank of Japan’s’ official bank rate is reduced from 5% to 4.5%.

  • March 1986 – the official bank rate is reduced from 4.5% to 4%

  • April 1986 – the official bank rate is reduced from 4% to 3.5%

  • November 1986 -  – the official bank rate is reduced from 3.5% to 3%

  • 1987 – the Louvre Accord is signed by the United States, the United Kingdom, West Germany, Japan, France, and Canada as a means to stop the continuous decline of the US Dollar caused by the Plaza Accord. Subsequently, the Bank of Japan’s official bank rate is reduced from 3% to 2.5%, which is kept until May 1989.

  • 1990 – the real asset market and stock market fall

  • 1994 – a devastating earthquake hits Japan and the value of Japanese yen begins to decline. The exchange rate is observed at 80 yen per dollar, which pushes the Bank of Japan to reduce its official bank rate down to 0.5%.

  • 1999 – the zero interest rate policy is started at the Bank of Japan

  • 2000 – the zero interest rate policy is ended after the IT bubble occurred

  • 2001 – an economic bubble burst is experienced by Japan; the BOJ adopts the quantitative easing policy

  • 2003 – 2004 – large exchange intervention operations are done by the Japanese government in the hopes of achieving economic recovery

  • 2006 – Japan’s economy improves and the interest rate at BOJ is raised to 0.25%

  • 2008 – Japan’s economy suffers another crisis, which pushes the BOJ to adopt the supplemental balance of current accounts policy. By the end of the year, the uncollateralized call rate of BOJ is reduced to 0.1%.