GFS LinkedIn
GFS Facebook
GFS Twitter
GFS RSS feed

Policy makers made 'fundamental misjudgement', says BoJ

Monday 27 September 2010 - by Will Henley

Governor of the Bank of Japan, Masaaki Shirakawa, has urged financial policymakers around the world to be “humble” in light of mistakes made during the recent global economic crisis.

In a keynote address this week to the Japan Society of Monetary Economics, the governor (pictured) highlighted the importance of financial regulation, while criticising those who he said had failed to forecast previous financial "bubbles".

He said: “Japan’s experience of the bubble and the financial crisis over the past two decades suggests the importance of making projections about future financial and economic conditions.

"Policymakers need to be humble. Looking back at the past policy failures at home and abroad, such mistakes occurred when policymakers made a fundamental misjudgement on the future economic and financial developments, rather than made slight errors in projecting economic growth and inflation.”

Speaking almost exactly two years on from the collapse of US bank Lehman Brothers in 2008, which led to a crisis in world financial markets, the governor added that many countries were today only on a “mild recovery path”.


He said: “Since the magnitude of the global credit bubble was so large, we have realised that it will take some time before advanced economies restore [to a] full-fledged recovery”.

Shirakawa, contrasting the experience of Japan in the 1990s with Europe and the US, added that the crisis had posed questions about the institutional arrangements for central banks and financial regulatory and supervisory authorities. But he said that the response in both countries had been broadly the same.

“Regarding policy responses to a bubble... it is certainly true that financial regulation and supervision plays an important role,” he said.

The governor, speaking on 26 September, added that the Bank of Japan was striving to improve its macroprudential analyses, restore sustainable growth to Japan, and strengthen its payment and settlement system in accordance with changes in financial markets.


WHAT DO YOU THINK?
 
Name:
   
Email:
   
Comment:
   
Post as Anonymous
  Display name
   
Please, enter security code
   
 

No comments yet.

STRAW POLL

Will markets in 2012 have a tougher time than 2011?

Yes

No

Don't know

View results

FIND A REGION world regions