Kazuo Ueda took office this Saturday and the challenge could not be greater.
(Photo: REUTERS)
Tokyo Negative interest rates, record debt, record budget: the new governor of the Bank of Japan (BoJ) is not necessarily to be envied. Kazuo Ueda took office this Saturday and the challenge could not be greater.
Japan is the last industrialized country that is still sticking to a negative interest rate policy. Ueda has to end it because the current policy is working less and less. At the same time, he must be careful that interest rates do not rise too much. Otherwise, with a national debt of around 250 percent of gross domestic product, Japan is threatened with a debt crisis that could shake the world.
The problem: So far, Japan’s monetary policy has been fully geared towards combating deflation. The previous head of the central bank, Haruhiko Kuroda, bought up massive amounts of government bonds. More than half of Japanese Government Bonds (JGB) are now in the hands of the Bank of Japan. It is also now the largest shareholder of listed companies in the country.
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