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Monetary Control Mechanism in Japan

Author

Listed:
  • Yoshio Suzuki

    (Executive Director, Bank of Japan)

  • Akio Kuroda

    (Senior Economist, Research Division 1, Institute for Monetary and Economic Studies, Bank of Japan)

  • Hiromichi Shirakawa

    (Economist, Research Division 1, Institute for Monetary and Economic Studies, Bank of Japan)

Abstract

This paper is to explain Japan's monetary control techniques and to analyze how they determine short-term money market rates and the money stock. We analyze that interest rates in the short-term call and bill-discount markets, operating variables of the Bank of Japan, are determined mainly through the adjustment of the official discount rate and of the "progress ratio of reserve deposits." We also analyze that the Bank of Japan controls an intermediate target, by relying the transmission of initial changes in the call and bill rates to other financial markets. Finally, we point out some problems that the Bank of Japan has to consider regarding monetary control during the process of financial globalization.

Suggested Citation

  • Yoshio Suzuki & Akio Kuroda & Hiromichi Shirakawa, 1988. "Monetary Control Mechanism in Japan," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 6(2), pages 1-27, November.
    • Handle: RePEc:ime:imemes:v:6:y:1988:i:2:p:1-27
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    Citations

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    Cited by:

    1. Hiroshi Yoshikawa, 1993. "Monetary Policy and the Real Economy in Japan," NBER Chapters, in: Japanese Monetary Policy, pages 121-159, National Bureau of Economic Research, Inc.
    2. J T Kneeshaw, 1995. "A survey of non-financial sector balance sheets in industialised countries: implications for the monetary policy transmission mechanism," BIS Working Papers 25, Bank for International Settlements.
    3. Robert E. Keleher, 1990. "Monetarism And The Use Of Market Prices As Monetary Policy Indicators," Contemporary Economic Policy, Western Economic Association International, vol. 8(2), pages 36-49, April.
    4. Sun Bae Kim & Ramon Moreno, 1993. "Money, interest rates and economic activity: stylized facts for Japan," Economic Review, Federal Reserve Bank of San Francisco, pages 12-24.
    5. Kazuo Ueda, 1993. "A Comparative Perspective on Japanese Monetary Policy: Short-Run Monetary Control and the Transmission Mechanism," NBER Chapters, in: Japanese Monetary Policy, pages 7-30, National Bureau of Economic Research, Inc.
    6. Joseph Bisignano, 1996. "Varieties of monetary operating procedures: balancing monetary objectives with market efficiency," BIS Working Papers 35, Bank for International Settlements.
    7. Darrat, Ali F. & Al-Mutawa, Ahmed & Benkato, Omar M., 1996. "On currency substitution and money demand instability," International Review of Economics & Finance, Elsevier, vol. 5(3), pages 321-334.
    8. Takatoshi Ito, 1989. "Is the Bank of Japan a Closet Monetarist? Monetary Targeting in Japan, 1978-1988," NBER Working Papers 2879, National Bureau of Economic Research, Inc.

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