Ex-BOJ Chief Shirakawa Wants Review of Monetary Policy Frameworks

Tokyo, March 2 (Jiji Press)--"It's time" for central banks around the world to rethink the foundations and frameworks of their monetary policies, such as inflation targets, former Bank of Japan Governor Masaaki Shirakawa has said.

"The time is ripe to reconsider the intellectual foundation on which we have relied for the past 30 years and renew our framework for monetary policy," Shirakawa said in an article he contributed to a quarterly magazine published by the International Monetary Fund on Wednesday.

The article came ahead of the end of the term of office for incumbent BOJ Governor Haruhiko Kuroda next month.

Shirakawa described the BOJ's current massive monetary easing, introduced in 2013, when Kuroda took office, as a "great monetary experiment." Although the monetary easing led the BOJ's balance sheet to balloon, its impacts on prices and economic growth have been "modest," he said.

Noting that monetary policy "became a quick fix for (Japan's) structural problems that required more radical reform," Shirakawa warned, "If monetary easing takes place over a longer period of, say, 10 years or more, then the adverse effects on productivity growth through resource misallocation become serious."

[Copyright The Jiji Press, Ltd.]