BUSINESSWEEK ONLINE : JUNE 12, 2000 ISSUE
INTERNATIONAL -- ASIAN COVER STORY "We Called the Policy Board the Sleeping Board" A talk with journalist-turned-central banker Sakuya Fujiwara Not that long ago, financial journalist Sakuya Fujiwara figured he would finish off his working days in his chosen profession. But in 1998, he was summoned by Prime Minister Ryutaro Hashimoto, who shocked him with a job offer: deputy governor of the newly independent Bank of Japan. A highly regarded pundit with the Jiji Press, Fujiwara never thought he would assume one of the most prestigious jobs in Tokyo officialdom. His slightly bohemian air is a bit out of place in the archconservative Bank of Japan. Yet as a longtime critic of the BOJ's practices, he offers a unique perspective. He talked about his life as an insider with Asian Economics Editor Brian Bremner. Here are edited excerpts of their conversation: Q: In 1998, the Bank of Japan was granted independence over monetary policy from political meddling. What was it like in the old days? A: The government had a major impact on the decision-making process. It wasn't totally independent. We had a policy board -- it was nominal. Of course, there were [regularly scheduled meetings], and they were a joke. It was a ceremonial occasion. We also called the policy board the sleeping board. Before, the BOJ would give...guidance to each individual bank about the amount that should be lent out. In other words, the BOJ acted in an aloof or authoritarian manner vis-à-vis the banking community. The BOJ was also hiding behind the shadow of the Ministry of Finance in terms of its relations with political circles and financial administration. Q: How have things changed? A: Today, we publish extensive minutes of policy board meetings, which run five hours or so. Two government members attend, but the government has no voting power on the board. There are monthly reports of our policies. Bank of Japan Governor Masaru Hayami gives press conferences of about 30 minutes after the policy board session is over and the outcome is disclosed. Last year Hayami attended 115 Diet sessions. Twice a year a report is submitted to the lower and upper houses of the Diet just like in the U.S. Such efforts are made to enhance the transparency of the central bank. Q: What do you make of the leadership style of Hayami, who is a devout Christian? A: He has been placing emphasis on independence and accountability. I was enlightened by his interpretation of the meaning of accountability. He thinks that in front of God, we are supposed to be fully accountable for what we have done on earth. Hayami is a man of conviction. He's stubborn in a good sense. For instance, Hayami forced banks to come clean on their true bad-loan levels. At the end of the day, this was accepted. In terms of BOJ organization reform, he took great initiatives. It's a trial-and- error process. Hayami has been trying to exert his leadership. Q: The central bank has also taken heat from critics for wanting to move away from Japan's zero-rate policy at a time when the economic recovery is not certain. How do you respond to such criticism? A: It's natural that society has criticized the BOJ. Two years ago, Japan was confronted with an unprecedented recession. In Kabuki plays, people often hold grudges when money matters are concerned. It's a matter of course that the BOJ is the bad guy. Even under normal times, we are doomed. BOJ has to squarely address the problems. It's always difficult to get support from all strata of society. [Hayami] has been very bold. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS Inside the Bank of Japan (int'l edition) ASIAN COVER IMAGE: Inside the Bank of Japan CHART: Japan Has Cut Rates to Zero...Without Sparking Inflation...But Growth Remains Anemic A Talk with the Taskmaster (extended) (int'l edition) Commentary: Why Summers & Co. Have Stopped Bullying Japan (int'l edition) ONLINE ORIGINAL: "No...to a Stop-and-Go Policy" ONLINE ORIGINAL: "The Public Is Wiser Than the Economists or Government" ONLINE ORIGINAL: "We Called the Policy Board the Sleeping Board" INTERACT E-Mail to Business Week Online

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