Ryozo Himino: Japan's economy and monetary policy

Speech by Mr Ryozo Himino, Deputy Governor of the Bank of Japan, at a meeting with local leaders, Oita, 6 December 2023.

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

Central bank speech  | 
15 December 2023


Good morning, everyone. Thank you for joining me today. I am pleased to be here in Oita, the home prefecture of the great thinker and educator of the Meiji era, Fukuzawa Yukichi, whom I admire a lot.

The 10,000 yen Bank of Japan note has featured Fukuzawa's portrait since 1984. The Bank plans to issue a new series of banknotes around the first half of July 2024, but the current series will remain valid, and we will continue to see Fukuzawa notes in circulation.

The 40 years we have spent with Fukuzawa notes have been a turbulent age. We witnessed an asset price boom in the late 1980s, its collapse in the early 1990s, and the banking crisis and the start of deflation in the late 1990s. We suffered from the Global Financial Crisis in 2008 and the Great East Japan Earthquake in 2011. We struggled to exit from deflation in the 2010s, and the 2020s began with COVID-19. We are now in the process of recovering from the economic shock caused by the pandemic.

After the start of deflation in the late 1990s, the Bank implemented various forms of nontraditional monetary policy. It is reviewing their positive and side effects from a broad perspective. We are keen to have your input and hear your views on how the Bank's policy worked in different phases of the past quarter century. Fukuzawa is known to have placed value on active debates conducted with the spirit of freedom. The Bank would particularly welcome critical views on its analysis and suggestions on what it should learn from the past.

I. Economic Activity and Prices

Developments since the Pandemic in Japan, the United States, and the Euro Area

The COVID-19 pandemic had an enormous impact on the Japanese economy. It exerted an equally severe impact on the U.S. economy and an even bigger one in the euro area. Subsequently, while the U.S. and euro area economies have seen a rapid recovery, Japan's recovery has been more moderate (Chart 1).