Science Fair Project Encyclopedia
Bank of Japan
Like most modern Japanese institutions, the Bank of Japan was born after the Meiji Restoration. Prior to the Restoration, Japan's feudal fiefs all issued their own money, hansatsu, in an array of incompatible denominations, but the New Currency Act of Meiji 4 (1871) did away with these and established the yen as the new decimal currency. The former han (fiefs) became prefectures and their mints became private chartered banks which, however, initially retained the right to print money. For a time both the central government and these so-called "national" banks issued money; to end this, the Bank of Japan was founded in Meiji 15 (1882) and given a monopoly on controlling the money supply.
The Bank of Japan issued its first banknotes on Meiji 18 (1885), and despite some small glitches -- for example, it turned out that the konnyaku powder mixed in the paper to prevent counterfeiting made the bills a delicacy for rats -- the run was largely successful. In 1897 Japan joined the gold standard and in 1899 the former "national" banknotes were formally obsoleted.
The Bank of Japan has kept on running ever since, except a brief post-WW2 hiatus when the occupying Allies issued military currency and restructured the Bank into a more independent entity. However, despite a major 1997 rewrite of the Bank of Japan Law (日本銀行法) intended to give it more independence, the Bank of Japan has been criticized for lack of independence. A certain degree of dependence is enshrined in the Law itself, article 4 of which states:
- In recognition of the fact that currency and monetary control is a component of overall economic policy, the Bank of Japan shall always maintain close contact with the government and exchange views sufficiently, so that its currency and monetary control and the basic stance of the government's economic policy shall be mutually harmonious.
According to its charter, the missions of the Bank of Japan are:
- Issuance and Management of Banknotes
- Implementation of Monetary Policy
- Providing Settlement Services and Ensuring the Stability of the Financial System
- Treasury and Government Securities-Related Operations
- International Activities
- Compilation of Data, Economic Analyses and Research Activities
The Bank of Japan is headquartered in Nihonbashi, Tokyo, on the site of a former gold mint (the Kinza) and, not coincidentally, near the famous Ginza district whose name means "silver mint". Despite featuring a neo-Baroque building from 1896 designed by Tatsuno Kingo , the Tokyo headquarters is a bit off the tourist track, and the better-placed Osaka branch in Nakanoshima is generally regarded as the symbol of the bank.
The chief of the bank (総裁, sosai) has considerable influence on the economic policy of the Japanese government. Toshihiko Fukui replaced Hayami Masaru as the governor of the Bank of Japan since March 2003.
- Yasuo Matsushita (around 1997)
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