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, Kanagawa, 14 January 2025.

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

Central bank speech  | 
14 January 2025

Introduction

Thank you for joining us today. Thank you also for your support for the Bank of Japan and its Yokohama Branch.

Kanagawa and the Modernization of Japan

In 1853, awakened by the blasts of cannons which Commodore Perry's fleet fired near Uraga, Japan started the process of modernization, opening the port of Yokohama and its window to the world. Yokohama was at the forefront of Japan's drive for "civilization and enlightenment," building steel mills, laying down railroads, and installing gas lamps. Since then, the Japanese economy has surprised the world with two miracles and has retreated from these miracles as a result of two major setbacks (Chart 1).

The first miracle was the modernization achieved for the first time in the non-Western world. Within only half a century, a small agricultural nation on the eastern edge of Asia became one of the world's five major powers. However, this achievement was reduced to ashes by World War II. The central area of Yokohama city, for example, was razed to the ground in a major air raid on May 29, 1945.

The second miracle was Japan's subsequent post-war reconstruction and rapid economic growth, and the industrial zone between Tokyo and Yokohama played a central role in this. Japan came to dominate world markets, one after another, starting with textiles and spreading to steel, electrical equipment, automobiles, machinery, and semiconductors. The Japanese economy survived the two oil shocks, and in the latter half of the 1980s, Japan was the world's largest creditor, the world's eight largest banks were Japanese, and the world's largest and third largest stock exchanges were those in Tokyo and Osaka.