Capital and Credibility of the Bank of Japan: A Perspective(in Japanese)
The Bank of Japan has used some unconventional monetary easing measures for more than a decade, and it is often pointed out that it might damage the Bank’s capital and thus jeopardize its credibility. First, this paper reviews the past literature on the role of central bank capital and how a damaged balance sheet hurts credibility. Then, this paper examines the recent situation of the Bank of Japan by applying its financial statement data in 2005-2011 to the model of Ize (2005). The examination shows that the Bank was in an unfavorable situation, but not bad enough to jeopardize its credibility thanks to its moderate use of unconventional measures. Finally, this paper summarizes some studies that should be developed in the future.
|Date of creation:||Dec 2012|
|Date of revision:||Dec 2012|
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Web page: http://www-econ.kwansei.ac.jp/~econ/index_e.html
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