Masazumi Wakatabe: Seven reflections on Japan's economy, monetary policy and the Bank of Japan

Speech by Mr Masazumi Wakatabe, Deputy Governor of the Bank of Japan, at the Center on Japanese Economy and Business, Columbia University, New York City, 27 February 2023.

The views expressed in this speech are those of the speaker and not the view of the BIS.

I am extremely honored and happy to give a speech here today at Columbia University's Center on Japanese Economy and Business, or CJEB. I would like to take this opportunity to share my personal reflections on almost five years' experience as Deputy Governor of the Bank of Japan.

The last time I gave a speech here was in October 2019. Three and a half years have passed since then, and a lot has happened during that time. My topic back then was "Japanification" and its potential lessons for the world; now inflation has returned. And I have returned too, but to a different venue, as CJEB has moved to a new campus.

I would like to offer seven personal reflections. Let me start with the Bank of Japan.

Reflection #1: It is all about teamwork

I believe most university students have heard of, or at least must pretend to have heard of, the name Adam Smith. He is still right on many things. One notable insight he had is the importance of the division of labor.1 It is important in two senses. First, the division of labor within central banks. Central banks are like sophisticated machines, precisely designed and meticulously executed. The word people at the Bank of Japan frequently use to describe their business operations is kenkakusei, which means firmness and exactness. The first time I heard the word, I checked my Japanese dictionary to see whether it really exists: it does exist, but it is not something that crops up in everyday conversation. Economists and the public alike tend to take for granted the process from policy-making decisions to their implementation. But we cannot and should not. It takes an enormous amount of effort to implement central bank operations as smoothly and stably as they do. One good example is the issuing of banknotes. Nowadays we tend to use cash less and less, but delivering banknotes to whoever needs them, whenever and wherever, is no easy matter.